For starters, it will give Bing a big boost in queries, since the deal calls for Yahoo to turn off its back-end search infrastructure and route all its queries through the Microsoft engine. This is important, because the more queries a search engine processes, the more precise it gets at selecting appropriate results, according to Hadley Reynolds, an IDC analyst. "The number of queries a search engine handles is a pivotal part of the technology, because the way search engines tune themselves to improve the relevance of the answers is by learning from the queries users execute on the system," he said.
Google will still retain the edge in this department even after Bing gets the Yahoo queries, but at least it puts Microsoft in a better position.
The higher volume of queries will also make Bing more attractive as a platform for pay-per-click, text search ads, which the 10-year deal stipulates will be sold by Microsoft. Yahoo will sell premium search ad services. "Certainly marketers are concerned with reach, so this is important. With the Microsoft-Yahoo deal, you get a stronger second player, so search marketers will take them more seriously," Sterling said.
When and if the deal gets regulatory clearance, its full implementation will take about two years, according to the companies. So for the time being, Microsoft and Yahoo will continue battling Google on their own, something they haven't had much luck doing in recent years.
Until the end of 2004, the search-engine market was a real race. For example, in December 2004, Google's share of U.S. search queries was 34.7 percent, with Yahoo in a close second place with 31.9 percent and Microsoft in a much better position than it is today with 16.3 percent, according to comScore.
But in 2005, Google started pulling away and taking share from both Yahoo and Microsoft, increasing its lead consistently until today, when it holds a commanding position, way out of the reach of its competitors.
Google ran away with this market during a time when Yahoo, Microsoft, Ask.com and other search players were feverishly trying to improve their engines, since the opportunity in search advertising had been evident for several years.
In January 2005, Microsoft took the wraps off of a beta version of a consumer search engine it had spent two years building from scratch. For years, Microsoft had used Yahoo's search engine to power MSN Search.
The following year, Microsoft removed the beta label from the search engine, branded it with its new Live moniker and stopped using Yahoo's search engine for good.
Every time Microsoft talked about its search engine, it criticized Google, saying that Google's technology left much to be desired and that the search experience in general was frustrating and ineffective. At the same time, Microsoft promised that its search engine would offer vast improvements across the board.
Not much has changed in Microsoft's discourse, nor in the dynamics of the search market. When launching Bing this year, Microsoft called it a "decision engine" that would let consumers move "beyond search." That hasn't happened and Google still reigns.
Still, search industry experts point out that there are emerging areas in search that offer opportunities, such as mobile, which is nascent.
Another area is semantic search, whose promise of engines that understand the meaning of queries and of the Web pages they crawl remains unfulfilled because it's very hard to scale up. Microsoft acquired a semantic search company called Powerset, but it's clear that the Powerset technology isn't widely implemented in Bing.
Then there's the social-media space with sites like Facebook and Twitter, which have a lot of potentially valuable content for search engines. Twitter recently started collaborating with both Microsoft and Google to make its content easier to crawl and index on their search engines.
In the case of Facebook, Microsoft could have an edge, because the two companies have a technology and advertising partnership. In fact, Facebook announced plans to make it easier for Bing to crawl and index its public status updates, but not with Google.
In the meantime, one thing Microsoft can be counted on is to keep keeping on. "Microsoft has gotten out of the starting gate with Bing and has proven it has the legs and the desire to run the whole race," said Gartner analyst Allen Weiner.
Now all that remains to be seen is whether Microsoft can make this a race worth watching.