Microsoft/Yahoo pact to challenge Google?

Can Microsoft/Yahoo challenge Google?

In order to challenge Google's long-term dominance of online advertising, Microsoft and Yahoo! have joined forces backed up by global advertising groups.

Despite the two companies' internet-search agreement being reviewed by the US Justice Department, it has received a massive boost in the form of support from WPP Group, Publicis Groupe, the Interpublic Group of Companies and Omnicom Group.

Good for advertisers?

The CEOs of the companies have reportedly signed an open letter from the American Association of Advertising Agencies requesting the US Department of Justice wrap up their investigation as soon as possible.

The letter is said to state that the pact would be "good for advertisers, marketing services agencies, web site publishers and consumers" due to "Yahoo! and Microsoft's proposal to combine their technologies and search platforms.

"As leading members of the advertising and marketing services industry, we urge the Department of Justice to bring its antitrust review to a speedy conclusion," the group said, "This proposal enhances competition, and should be allowed to take effect as soon as possible. These benefits are too important to wait for."

It is a blow to Google's pride if anything, as it shows that advertisers are clearly fed up with their continuing monopoly and wish to see the internet giant challenged, even if that means the addition of an similar online behemoth coming onto the market.

An alternative to Google?

If the Microsoft/Yahoo! deal goes ahead, it will see Microsoft's Bing search power ad queries on Yahoo! sites. In return, Microsoft would pay Yahoo! 88 percent of all revenue from advertisements generated from those sites.

It is a lucrative market - and one that Google currently holds 77 percent of. In comparison, Yahoo! currently holds eight percent and Microsoft a measly three percent.

Microsoft and Yahoo's road to a partnership has not been an easy one, with the pact being scrapped in November following criticism and the threat of legal action from the Justice Department on competition grounds. Interestingly, back then, the agreement was also opposed by the Association of National Advertisers, a trade group that represented companies like Wal-Mart Stores Inc. and General Motors Corp.

Meanwhile, their advertising groups have taken a more neutral tone, waiting to see which way the wind blows before weighing in. This includes the Association of National Advertisers, which includes large companies such as Procter & Gamble Co.

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