There we were just thinking Microsoft had sewn-up Yahoo's search-engine powers by licensing Bing to it, and now it looks like Yahoo's still polishing its search powers all on its own anyway. What the heck is going on?
Complex, high-stakes big-business is what's going on it seems. During the Yahoo-Bing press conference, Yahoo execs were careful to mention two things: The Microsoft tie-up was only for Bing, and the two companies would compete on all other fronts. And Bing would only power the operation—Yahoo is retaining the rights to the "look and feel" of its services. Well, this news demonstrates Yahoo has a pretty broad interpretation of that second point.
Because during a press event yesterday, announcing make-overs for Yahoo Mail and Messenger, Yahoo said it was going to add a bunch of functions to its search engine. These include a new filter to sift "dangerous" links from Bing's served-up search responses, a box for user-controlled search optimization, in-page video previewing, and outward-connecting boxes on the search page will connect to sites like Yelp to tie-in reviews on stores and restaurants that pop up in the search results. Yahoo will also exercise control over which of the ads it uses from those served up by Bing during its search process.
All that sounds like Yahoo is trying to out-Bing Bing—which already brands itself as a new kind of search engine that tries to deliver more pertinent information more easily than Google does. Yahoo's front-end for Bing really is burying the fact it's tied to Microsoft, and relegating Bing to merely being the data pipe for search queries.
It's simply a question of raw cash. The search engine market is worth such a frightening pile of dollars (Google's quarterly revenue is $5.5 billion, for example) that Yahoo is trying to maintain its position in the market—by adding facilities to its Bing-powered search page, it can still appear like a different player on the scene, otherwise users may be tempted to just click on from Yahoo and use Bing wholesale. That would have significant impact on Yahoo's potential to draw online advertisers to use its site—and in the long term that would affect its business. Yahoo's SVP Prabhakar Raghavan all but admitted this when he noted "We are not a version of Bing [...] We are Yahoo and that will continue. We collaborate on the back-end but we are competitors on the front-end."
Yahoo's playing a tricky game though—Microsoft has demonstrated it's pretty agile with Bing already, it's market share is increasing, and there's nothing to say it won't try to emulate or supersede Yahoo's front-end interface by tweaking its nascent engine. Looks like this ten-year business tie-up is going to be fascinating to watch...and probably have some interesting knock-on bonuses for users too.