Microsoft Corp’s assault on search engine leader Google Inc took a major step forward on Thursday as US and European regulators cleared the software firm’s search partnership with Yahoo Inc.
The 10-year deal, struck last July, is the biggest effort by Microsoft to establish an online business to rival Google — an area where Microsoft has lost US$5 billion over the last four years.
“Microsoft really has room to throw money at this,” said Kim Caughey, senior analyst at Fort Pitt Capital Group. “I think it can work. If they can make inroads in specific target areas, they could have something positive to report.”
Microsoft has already made some progress with its search engine, Bing, picking up 3.3 points of market share since its launch last June.
But Bing is not likely to “push Google off a very big pedestal any time soon,” Caughey said.
“In terms of our modeling, we really don’t see any impact from Microsoft-Yahoo on our Google numbers,” said Clayton Moran, an analyst at The Benchmark Co.
“It doesn’t change much in terms of the competitive dynamics of the industry right away,” he said. “From a Google perspective, looking out over the next couple of years, it’s a nonevent.”
The deal, cleared unconditionally by the US Department of Justice and the European Commission on Thursday, is not expected to affect Microsoft’s bottom line, but could lay the foundation of a profitable online business.
The Department of Justice’s antitrust division said the deal was unlikely to substantially lessen competition.
US market participants had expressed support for the partnership as a way to create a more viable alternative to Google, the division said in a statement issued late on Thursday.
Google, which did not oppose the partnership, did not comment specifically on the regulatory approval, but said that there has always been “robust” competition in the search ad business. Its shares rose 1.1 percent.
The deal means Bing becomes the search engine for Microsoft and Yahoo sites, while Yahoo focuses on attracting big advertisers.
Microsoft will handle the automated auction of search ads for use on both companies’ sites and pay Yahoo a portion of search ad sales generated on Yahoo pages.
Last month Yahoo handled 17 percent of US Internet searches, while Microsoft took 11.3 percent, comScore said.
Globally, Google is even more dominant, with 90 percent of the search market compared with 7.4 percent for a combined Yahoo and Bing, based on November data from Web research firm StatCounter.
Approval means Microsoft can begin the task of putting its Bing search engine into Yahoo sites.
The companies aim to get the partnership fully operational in the US by the end of this year. The partnership should be globally complete by early 2012.
The deal had already been cleared by regulators in Australia, Brazil and Canada, but needed US and European approval to take effect. The companies said they are still working with regulators in South Korea, Taiwan and Japan.
EXTRATERRITORIAL REACH: China extended its legal jurisdiction to ban some dual-use goods of Chinese origin from being sold to the US, even by third countries Beijing has set out to extend its domestic laws across international borders with a ban on selling some goods to the US that applies to companies both inside and outside China. The new export control rules are China’s first attempt to replicate the extraterritorial reach of US and European sanctions by covering Chinese products or goods with Chinese parts in them. In an announcement this week, China declared it is banning the sale of dual-use items to the US military and also the export to the US of materials such as gallium and germanium. Companies and people overseas would be subject to
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) founder Morris Chang (張忠謀) yesterday said that Intel Corp would find itself in the same predicament as it did four years ago if its board does not come up with a core business strategy. Chang made the remarks in response to reporters’ questions about the ailing US chipmaker, once an archrival of TSMC, during a news conference in Taipei for the launch of the second volume of his autobiography. Intel unexpectedly announced the immediate retirement of former chief executive officer Pat Gelsinger last week, ending his nearly four-year tenure and ending his attempts to revive the
WORLD DOMINATION: TSMC’s lead over second-placed Samsung has grown as the latter faces increased Chinese competition and the end of clients’ product life cycles Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) retained the No. 1 title in the global pure-play wafer foundry business in the third quarter of this year, seeing its market share growing to 64.9 percent to leave South Korea’s Samsung Electronics Co, the No. 2 supplier, further behind, Taipei-based TrendForce Corp (集邦科技) said in a report. TSMC posted US$23.53 billion in sales in the July-September period, up 13.0 percent from a quarter earlier, which boosted its market share to 64.9 percent, up from 62.3 percent in the second quarter, the report issued on Monday last week showed. TSMC benefited from the debut of flagship
TENSE TIMES: Formosa Plastics sees uncertainty surrounding the incoming Trump administration in the US, geopolitical tensions and China’s faltering economy Formosa Plastics Group (台塑集團), Taiwan’s largest industrial conglomerate, yesterday posted overall revenue of NT$118.61 billion (US$3.66 billion) for last month, marking a 7.2 percent rise from October, but a 2.5 percent fall from one year earlier. The group has mixed views about its business outlook for the current quarter and beyond, as uncertainty builds over the US power transition and geopolitical tensions. Formosa Plastics Corp (台灣塑膠), a vertically integrated supplier of plastic resins and petrochemicals, reported a monthly uptick of 15.3 percent in its revenue to NT$18.15 billion, as Typhoon Kong-rey postponed partial shipments slated for October and last month, it said. The