Tech Experts talk about the Bing & Yahoo! Search Deal

Erick Schonfeld (TechCrunch co-editor), Steven Levy (Wired Magazine), and Nick Wingfield (The Wall Street Journal) discusses the Microsoft/Yahoo search deal with Charlie Rose.

A summary of the discussion:

• The initial $48 billion deal to acquire Yahoo! from Microsoft last year is better for Yahoo! in terms of value
• Under the new deal, Yahoo!`s websites will be powered by Microsoft new search engine, Bing. Yahoo! will get 88 percent of the ad revenue from searches on its sites for the first five years. With the partnership, the two hope to take on Google, which currently commands about 65 percent share of the U.S. market. The agreement follows Microsoft`s failed takeover bid for Yahoo! and shows the continuing importance it is placing on search.
• In January, Carol Bartz, Yahoo!’s new CEO, and Microsoft started talking about a more limited deal, not a full-blown acquisition, in which Microsoft basically take over the search operations, handle the search operations on Yahoo! in exchange for some value. .
• Shareholders of both companies seem to think it`s a better deal for Microsoft than it is for Yahoo! The stock of Microsoft went up a bit yesterday and up a bit today. Yahoo! is down.
• Yahoo! is getting 88% of the ad revenue from advertising sold on searches that Microsoft delivers. So, both parties argue that it`s better for Yahoo! to get this, because they`re getting more — a bigger chunk of the share of ad revenue on an ongoing basis, but there is no big upfront check, and that seems to disappoint people.
• Yahoo! was in a tough position. It was seeing market share eroding from Google, and now the prospect of market share erosion from Bing.
• With Yahoo!`s market share, Bing could go to 30 percent of shares — 30 percent of searches in the U.S.
• Microsoft is losing money in its Internet search business right now. But they just want to gain the share.
• Google is not only strong in search with 65 percent plus share, but Google is also moving into these other areas that are quite threatening to Microsoft.
• Yahoo! doesn`t have Microsoft`s Windows money or Google`s search money. So ultimately search is an expensive game and Yahoo! has to get out of that business, ultimately.