Microsoft and Yahoo announced a partnership that will allow Microsoft to better compete with Google by consolidating its market share in search and search advertising. Microsoft will acquire a 10 year license to Yahoo's search technology and it will power Yahoo Search.
Bing will become Google's main competitor in search, with a market share of about 28% in the US (comScore, June 2009) and about 11% worldwide (StatCounter). After a successful relaunch in May, Microsoft's search engine didn't convince many people to switch from Google. Bing's ranking algorithms have been improved and Microsoft has a lot of interesting specialized search engines (a great interface for image search, an excellent travel site), but the overall experience doesn't offer too many reasons to use Bing as your main search engine.
"Through this agreement with Yahoo!, we will create more innovation in search, better value for advertisers and real consumer choice in a market currently dominated by a single company. Success in search requires both innovation and scale. With our new Bing search platform, we've created breakthrough innovation and features. This agreement with Yahoo! will provide the scale we need to deliver even more rapid advances in relevancy and usefulness," said Steve Ballmer, Microsoft's CEO.
"As a result of the deal, Microsoft, which has great technologists and deep pockets, will have the scale to bring users faster, more useful and more personally relevant search. Competition equals innovation. But with one player dominating 70% of search, that field has been pretty lopsided. This transaction will create a healthy competitor that’ll keep everyone on their toes," said Carol Bartz, Yahoo's CEO.
I don't think scale is the missing ingredient from Bing's recipe: Google managed to create a search engine that offered great results even when it was just a small project. "Google ended 1999 averaging about 7 million searches each day, a roughly 70,000% increase over the 10,000 searches per day that were performed on the Google site in December 1998," announced a newsletter from 2000. Microsoft should focus on innovation, on finding new ways to improve search quality and to make the results more useful, instead of trying to better compete with Google.