07:59 AM

YHOO-GOOG Deal Shows It's Not About Search

Foremski's Take: What would happen if somebody developed a better search engine than Google? Would it be able to unseat Google? And what would happen to Google?

Nothing would happen to Google. Because if you could build a better search engine GOOG could monetize it way better than you or anyone else.

GOOG would partner with the better search engine because it has the monetization platform, it has the ad delivery network, and ad sales representatives in nearly every country.

The market has moved on--it's not enough to be better than Google in search, you also have to have be better in all aspects of the business.

That's what Microsoft needs to focus on, building a great monetization platform for search - search alone is not good enough even if it's great.

Reuters: Yahoo reaches Google ad deal, Microsoft talks fail

Yahoo said it had agreed to let Google put search ads on its site in what it called an $800 million annual revenue opportunity that would boost cash flow by $250 million to $450 million in the first 12 months.

Yahoo's ads and Google's would be pitted against each other in an auction style process that could make a deal easier to pass regulatory approval.

"Yahoo is being a reseller of Google whenever it makes sense and that is likely to be a lot of the time given how much more effective Google Web search ads have proven to be," Global Crown Capital analyst Martin Pyykkonen said.