Microsoft/Yahoo Deal Less Significant in Europe than U.S.

clickz_ukandeu.gifAfter more than a year of speculation and failed negotiations, Microsoft and Yahoo finally unveiled a search partnership yesterday which will effectively see Yahoo handing its technology and audience over to Microsoft in exchange for a share of ad revenue.

According to figures from measurement firm Nielsen Online, a combined MicroHoo entity would account for around 26 percent of the U.S. search market, compared to Google’s estimated 63 percent. Outside of the U.S. however, this combined share is significantly smaller, and the tie-up could have less impact on those markets as a result.

In the U.K., for example, Google currently accounts for around 84 percent of searches, compared to just 8.7 percent for Microsoft’s Bing and Yahoo’s search product combined. The French market tells a similar story at 88 percent vs. 7.5 percent. In Germany Google’s dominance is even greater, with the search giant taking 91 percent while a combined Microsoft/Yahoo takes just 3 percent, according to Nielsen Online.

Pan-European data from comScore estimates that Microsoft and Yahoo’s combined share across the continent equated to just 3.5 percent of searches in May this year, compared with Google’s 87 percent. Russian engine Yandex accounted for 4.8 percent.

On the surface therefore, the tie-up will not deliver a quick fix in providing a serious rival to Google’s market share within Europe. Despite this, some suggest the mere presence of a consolidated number two player will help kick start competition.

Commenting on the deal, Forrester analyst Rebecca Jennings said, “While this won’t immediately worry Google, it will create a more viable second-string player in all markets giving interactive marketers a significant, credible alternative…outlet for their search spend, or at least a better incentive to run trials outside of Google.”

“This deal should help convince even the most stubborn budget-holder that spreading their money outside of Google would be beneficial,” she added.

Some also suggest the tie-up could pave the way for further consolidation outside of the U.S. and Western Europe, an area in which even Google has struggled against local competitors in some markets.

“This deal is very good for advertisers,” Andy Atkins-Kruger, CEO of search agency WebCertain told ClickZ News. “Now that Microsoft and Yahoo are effectively combined from a search engine point of view, the door is opened to lots of other new partnerships. Previously, it would have been difficult for search engines such as Baidu, Yandex, or Seznam to partner with another search engine.”

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