Overseas Search Execs Say Microsoft Should Look Beyond Yahoo

As Microsoft grows more hostile in its Yahoo takeover efforts, some search marketers wonder whether the software firm ought to be pursuing overseas targets instead.

“Microsoft could be doing far better things with $40 billion dollars,” said Andy Atkins-Kruger, managing director of international search marketing firm Web-Certain, speaking with ClickZ News last week. Microsoft made a $44.6 billion bid for Yahoo earlier this month, which Yahoo’s board rejected. Since then, Microsoft has threatened a Yahoo Board coup.

“Search is global,” he continued. “Microsoft should be looking to expand its presence outside of the U.S., instead of paying over the odds for a company that will have relatively little effect on its global presence.”

Attendees at the Search Engine Strategies event in London last week expressed excitement at the prospect of a more competitive search landscape as a result of the proposed acquisition. However, they are concerned a Yahoo takeover may be the wrong way for Microsoft to go about spurring competition and taming Google’s dominance.

In December 2007, Google’s U.S. search audience share stood at 58 percent, ComScore reports. Yahoo ranked second with 23 percent, followed by Microsoft at just under 10 percent. Although a Yahoo purchase would strengthen Microsoft’s search offering in the U.S., marketers suggest it is unlikely to cause any major waves outside it.

“I don’t think Microsoft would see [$44.6 billion] worth of return on this investment,” said Atkins-Kruger.

Other search professionals were skeptical as to whether a Microsoft/Yahoo combo would be capable of eating into Google’s U.S. dominance, and also voiced concerns that a failed challenge in the U.S. market could result in a complete Google whitewash.

According to ComScore, Internet users outside the U.S. now account for over 80 percent of the world’s online population. If Microsoft is truly hoping to challenge Google in search, therefore, perhaps it would do well to look at firms based in international markets in which Google does not already have such a strong foothold.

Atkins-Kruger cited potentially more lucrative targets, such as Yandex and Baidu, the dominant search players in the Eastern European and Chinese markets, respectively. ComScore reports that between January 2006 and January 2007, Internet penetration in China and The Russian Federation rose by at least 20 percent year-over-year compared with a 10 percent increase in the U.S.

Google acquired a minority stake in Baidu in 2004, and later unloaded the stock in ’06.

Andreas Pouros, managing director at SEM firm Greenlight, acknowledged that Microsoft may find more solid search investments outside of the U.S., but suggested the proposed purchase is perhaps more tactical than a simple attempt to gain audience share.

“It would make more sense for Microsoft to pursue less Google-dominant markets,” he said. “But at the same time, it can’t just allow Google to run away with things in the U.S.”

“I think this bid is largely about hindering Google,” he continued. “Microsoft may just be looking for any way it can stay in the game.”

Microsoft still appears to be dead set on winning Yahoo. The software giant hired a proxy solicitation specialist recently, following its promise to “pursue all necessary steps” to secure a deal. If Microsoft does plan to launch a proxy battle, it now has until March 13 to nominate a new board of directors ahead of Yahoo’s annual meeting in June.

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