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Yahoo Not Happy With Bing Search Deal

Max 'Beast from the East' Smolaks covers open source, public sector, startups and technology of the future at TechWeekEurope. If you find him looking lost on the streets of London, feed him coffee and sugar.

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Merissa Mayer says partnership with Microsoft is not helping against Google

Yahoo CEO Marissa Mayer has admitted that the ten-year search deal her company signed with Microsoft   in 2009 hasn’t been delivering the expected revenue or market share growth. In fact both Microosft and Yahoo have been losing market share.

Ex-Google executive Mayer, who has been in charge of the company for the past 12 months, said the main priorities for Yahoo were growing impressions and improving monetisation.

Yahoo search, powered by Microsoft technology, currently enjoys almost twice the market share of Bing.

The search deal was agreed 18 months after Microsoft failed to buy Yahoo for $44.6 billion.

‘Microhoo’

In July 2009, Microsoft entered a decade-long agreement with Yahoo to power its search queries and advertising. The two companies hoped that by pooling their resources together, they could mount a more serious challenge to Google.

Marissa_MayerYahoo completed the transfer of its search infrastructure to Bing in the US back in August 2010, and in Europe a year later.

Along the way, Microsoft paid Yahoo 88 percent of the traffic acquisition fees from advertising on its sites, and in return, Yahoo provided advertising sales teams for both companies.

While Yahoo was getting much-need cash from Microsoft, it continued to watch its search share slip and its CEOs succeed each other in an infernal carousel. Finally in 2011, Marissa Mayer, longtime Google engineer and executive, took the reins from Scott Thompson, who served as chief executive for four months before being ousted for embellishing his resume.

Since then, Yahoo has been doing reasonably well. Two weeks ago, the company posted first revenue growth in 4 years, and its stock has risen more than 30 percent since Mayer took the helm.

Speaking at the Goldman Sachs Technology and Internet Conference in San Francisco on Tuesday, the CEO said she wasn’t happy about the deal arranged by her predecessor Carol Bartz.

“One of the points of the alliance is that we collectively want to grow share rather than just trading share with each other,” said Mayer on Tuesday, reports Reuters.

“We need to see monetisation working better because we know that it can and we’ve seen other competitors in the space illustrate how well it can work,” she added.

And Yahoo is not afraid to look at other options. Just a few days ago, it signed a contextual advertising deal with Google, at a time when Microsoft launched a campaign which attempted to discredit the competitor’s targeted advertising products.

According to Reuters, Mayer also said that the company plans to reduce the number of mobile apps it maintains, while trying to attract more users to its websites. “I’m not confused. Our biggest business problem right now is impressions. Basically can we grow impressions, can we get growth happening here,” the CEO told investors.

When the Bing search engine deal was arranged, Microsoft and Yahoo held 2.9 percent and 7.8 percent of the global market respectively. According to the latest data from comScore qSearch, today, both have lost ground. The worldwide search engine market share stands as follows: Google still retains a comfortable lead, with more than 62 percent of the market, followed by China’s Baidu with 8.2 percent, Yahoo with 4.9 percent, Yandex with 2.8 percent, and Microsoft with 2.5 percent.

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