Yahoo! buys! Inktomi!

Yahoo! is buying Inktomi for $235m cash. The deal values the former high-flying search engine firm, long since crashed to earth at less than a third of its IPO debut in 1998.

The inference we draw is that Inktomi technology will at some point replace Google (free) and Overture (paid-for key word placement) search engines currently in use at Yahoo!

The takeover also explains Inktomi's decision to jettison its business search division last month to Verity for $25m. We can now see this as a housecleaning exercise to make it more attractive to a prospective buyer.

By most measures, Yahoo! is the world's biggest portal - however much MSN fudges the figures with IE browser default searches. But Google is getting more portal-like by the day, and catching up fast. That means that for the likes of Yahoo!, AOL and others, it starts looking less like a supplier and more like a competitor. Likewise, Inktomi's biggest customer is MSN. But for how long? ®

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