Microsoft Yahoo Deal : Impact on Online Publishers and Google Pricing

This deal definitely holds much for all those connected to the online world! According to the latest posted news, Microsoft has approached Yahoo, a Sunnyvale located content and search portal firm to get on to the table to discuss friendly takeover note by the former. If affected, the takeover would be one of the largest in the American corporate history. Also, it would be the largest takeover in the history of Technology sector.

The takeover announcement reflects how is the biggest software firm on earth threatened by the efforts of Google. Both Yahoo and Microsoft lag far behind Google in the search market. Hence, even the combined forces of Yahoo and Microsoft will require building up a strong ground before they can set a challenge for Google which controls around 62 percent the market share in the lucrative search market across the world. The combined entity would still control only 16% of the talked market.

Yahoo and Microsoft acquisition would leave only Google and Microsoft as the big conduits connecting online publishers and advertisers. This might create unhealthy dominance with the Giant participation. Also, Google and Microsoft together would mean an overwhelming share of the instant messaging and web email accounts. The combined entity would be able to command up to 85% of web visitors. The combined entity would also display 59 per cent of the actual ad impressions sold and displayed online. Ad impressions sold online are the major sources for revenue for online publishers.

In the situation, where the market has been dominated by only one major player in online advertising, Google, the deal of the two big entities would be beneficial for online advertisers and publishers. However, market experts believe that till these two shake hands (Which is as yet a tentative move) i.e. combined entity of Yahoo plus Microsoft, they would still have to be on their toes and keep a check to stay competitive as far as the financial deals with the publishers is concerned. Post the tie up, the new entity and Google would become sole pipes and intermediary between the advertisers and publishers and would command enormous power due to their tact of targeting specified demographic areas. However, the current foothold of Google being strong still has left the thinking grey cells in question!

Google especially, would continue to be a part of everyone’s cup of tea. This is because it is a part of almost everyone’s revenue base. Its ability to have automatic influence over the content would allow it to COMMAND pricing. Its control over almost 3/4th of search market means that it has moved wider in the online advertising market.

However, things could change where the Google market share has made competition tough to enter. It would not be tougher any more. With the entry of this gigantic entity, the monopolistic structure of market would display some change and Google is likely to face strong competition in the online ad market in Western Europe, where it commands 80% of market share. Pricing terms would have to be made more flexible and improved credit lines would have to be provided to online publishers.

Google, as expected, is not sitting idle. It has tried to bring another view point to the much cherished deal by marketers. It is openly showing some opposition towards the proposed deal on the grounds of internet principles like innovation and openness. Google believes that rather than making things better, this tie up of Microsoft and Yahoo would leverage upon the Windows operating system to make the consumers automatically glued to online services of instant messaging and emails through set ups in PCs. Google will try to bring up enough such alarming issues before the deal between Microsoft and yahoo strikes off. This would also provide Google enough time to draw up its own strategy and plans to counter the Microsoft deal.

Small and independent publishers on the other hand, are trying to join forces so as to stand competition and consolidation from these giant entities. Some not too big market players, small writers and publishers now stand a greater chance of getting lucky by the way of contextual advertising.

Online publishers, advertisers and consumers are most to benefit out of the deal, provided it works. As viewed now, this deal seems to have a warm welcome as offering credible alternative to the online world only becomes a necessity as a part of the increasing competition.

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