Microsoft and Yahoo Resume Discussions About Collaboration?

It seems that Yahoo and Microsoft are reportedly trying to arrive at a possible advertising agreement which will help the two major search players to counter the increasing dominance of Google in the online advertisement market.

The preliminary discussions which reportedly involved a face to face meeting between their respective chief executives Carol Bartz and Steve Ballmer were held last week.

The discussions are expected to cover a wide range of topics including Yahoo taking over Microsoft’s display business and Microsoft managing the search service for both the companies.

It is also interesting to note that after Microsoft has put it a considerable amount of investment to augment its search service which included hiring of leading search executives like Qi Lu from Yahoo.

Though both Yahoo and Microsoft believe that a partnership amongst them would help create a more powerful challenger to Google in search arena, there is no guarantee that it will be able to wean away advertisers from Google.

The renewed contact between the two companies is unlikely to bother Google in the short run as the search giant continues to gallop ahead and according to ComScore today has more than double of the combined share of Microsoft and Yahoo in the US search market.

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Our Comments

Microsoft has been courting Yahoo for nearly 15 months now and the long melodrama has had a direct hit on both companies as far as search is concerned. Google has widened the gap between both companies and it is unlikely that a Microhoo company will manage to reduce it. Crunch time is approaching and it could already be too late as Google is unlikely to lose this battle.

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