Last year, Yahoo rejected a whopping $44 billion offer from Microsoft to purchase their search business. It seemed like a pretty dumb idea for Yahoo to reject that offer even at the time (I criticized it pretty heavily when TheDomains broke the news).  Yahoo was one of the stocks heavily speculated (even by tech stock standards back then) during the Dotcom Boom and never fully recovered when the bubble burst. The last time Yahoo shares were trading above $44 was back in 2000, so this offer was more than fair. 

This new deal reached between Microsoft and Yahoo guarantees Yahoo nothing. Yahoo will receive an 88% share of revenue derived from traffic originating from Yahoo-owned websites for the first 5 years of the agreement.

My thoughts? Brilliant move by Microsoft, another dumb move by Yahoo. Microsoft will be in a position to offer Yahoo an even lower revenue share in the future and there’s not much of an alternative for Yahoo — the U.S. Justice Department already concluded a Google-Yahoo search partnership won’t be happening (at least no time soon).

This is all still pending regulatory approval, however I think it’ll go through. With the monopoly Google currently has on search, what we really needs is a powerful competitor — not a bunch of smaller competitors like Ask.com or Dogpile which realistically haven’t a chance in hell of overtaking Google.

What this will mean in the future for domainers and webmasters remains to be seen — I reported on July 26th that Bing users are much more engaged by advertising. It remains to be seen what the reason for this is and whether the television advertising and other promotions Microsoft is offering to promote Bing are skewing results. As Mike noted over on TheDomains (see first link), this will mean 12% lower paying clicks for those currently monetizing their domains through Yahoo, however, assuming the click-through rate for those monetizing their websites through Yahoo goes up anywhere near what Bing is currently reporting, they should end up earning more money resultant of this search partnership.

It would sure be nice to  see Microsoft force Google to be more competitive and perhaps stop or scale back its bullying of website owners. Don’t know about you but I’m getting a little tired of reading”Matt Cutts said this” and “Matt Cutts said that” on every SEO website.

Related posts:

1. Bing Users More Valuable
2. Google’s Search Market Share Falling
3. Social Media’s Effect on Search Engines