The recent deal announced between Microsoft and Yahoo strikes me as odd.
I understand that they are looking to create a competitor to Google in both search and advertising, but the "price paid" seems very high - at least on the part of Yahoo.
Major terms of the deal:
So, boiling it down, it appears Yahoo are giving up their search engine technologies (for at least 10 years) in conjunction for (at least current) revenues to be paid by Microsoft for algorithmic search advertising.
Microsoft have to maintain a sales force to sell other advertising, so they aren't saving costs there. They are still having to maintain search so they aren't saving costs there. They are paying Yahoo for traffic acquisition, and revenue for algorithmic search advertising, so they are losing money there. Their benefit seems to be
10 years is a long time. Search changes a lot in 10 years. Google was only just starting out 10 years ago. Altavista (at least where I was using the web) was top dog back then. I'd be interested to see if Yahoo are going to maintain their search technology, or just let it die off. Is this a sign that they no longer want to compete in search, but be a destination that pulls together other properties (harking back to their very early days I guess). I guess time will tell if Yahoo's apparent specialisation strategy was a sensible or dumb move. Microsoft are banking on Bing becoming a google killer, or at least a serious competitor, in the long term. They also apparently believe that paid search results are the way of the future - that's why they want the traffic.