Feeds

Yahoo, Overture: more consolidation likely

Ball in MSN's court

  • alert
  • submit to reddit

Secure remote control for conventional and virtual desktops

Yahoo is leveraging its high share price to fund the acquisition of Overture Services. If the deal goes through, Yahoo would own the sponsored and algorithmic search engines used by its main rival, Microsoft's MSN. Eyes are now on Microsoft, which may now be looking to buy a search provider itself.

Yahoo has said it will pay 0.6108 of a share and $4.75 cash for every share of Overture, valuing the company at $1.63 billion.

Yahoo CEO Terry Semel said Yahoo will start to use Overture's pay-per-click text ads across more of its web properties. Overture currently provides sponsored search results, but Yahoo will use the ads elsewhere, such as in its shopping channel.

The agreement also means that Yahoo will own some of the best web search technology available, and will have the early patents to back it up. The company bought Inktomi in December, and Overture owns AltaVista and Fast Search.

The deal increases the already significant likelihood that Yahoo will sever ties with Google as soon as feasible and start to compete head-to-head. Google currently provides the pure algorithmic search part of Yahoo's search offering.

It also means that Yahoo will own both the sponsored and algorithmic search services used by MSN, its main competitor. MSN uses Overture for sponsored listings and Inktomi for algorithmic search.

Yahoo CFO Sue Decker gave the suggestion that the company has considered that MSN may cease to be an affiliate, in her explanation of financial models used to assess the effects of the transaction.

The ball is essentially now in MSN's court. It has some very early-stage algorithmic search developments underway, as evidenced by the MSNBot crawlers showing up in web server logs around the world, but no announced sponsored search plans.

This raises the possibility that further consolidation could be likely. Public companies playing in sponsored search include LookSmartWhich also has algorithmic search) and FindWhat. Ask Jeeves, which uses Google for sponsored search, is also a potential target, as is Google itself, although the thought of Microsoft buying Google would be enough to give millions of geeks nightmares for months.

Source: Computerwire/Datamonitor

Recommended research: Reuters Business Insight, "The Web Analytics Outlook - Increasing online profits" (RBTC0065)
© datamonitor logo

Datamonitor is offering Reg readers some of its technology research FOC. Check it out here.

The essential guide to IT transformation

More from The Register

next story
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Premier League wants to PURGE ALL FOOTIE GIFs from social media
Not paying Murdoch? You're gonna get a right LEGALLING - thanks to automated software
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Ballmer quits Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Online tat bazaar eBay coughs to YET ANOTHER outage
Web-based flea market struck dumb by size and scale of fail
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
prev story

Whitepapers

5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.