July 29, 2009

If Yahoo finally pulls the trigger on the on again, off again, mega-search deal with Microsoft, what will happen to the enormous investments it's made in its search infrastructure?

The partnership reportedly under discussion would involve Microsoft (NASDAQ: MSFT) taking over Yahoo's search business and sharing ad revenue. The deal could also involve some kind of partnership in Internet display advertising, where Yahoo (NASDAQ: YHOO) is an established leader.

A Yahoo spokesman told InternetNews.com that the company would have no comment in line with its standard practice of not commenting on "rumors and speculation."

Yahoo has said it will continue to research and innovate in search even if it does a deal with Microsoft, according to IDC analyst Karsten Weide.

They've said they will still work on making search better, so they have the option of one day taking it back in-house, but I don't really buy that," Weide told InternetNews.com. "Once the daily pressure is gone to be the best you can, there is no way you can be as good."

Weide has been a big supporter of Yahoo CEO Carol Bartz since her appointment late last year, but he's consistently opined that a search deal with Microsoft would not be good for Yahoo.

Source:- Internetnews.com