In the current scenario, Google is a name getting common in masses and is at its high. This has created a tension among its competitors like Microsoft and Yahoo. There had been a rumor about it since very long time but now it’s sure news that Microsoft and Google would come together, and as a single entity, they would try to take on their biggest competitor, Google and they announced their Internet search deal which will be helpful to both the companies.
Where on one hand, Bing, the search engine of Microsoft would try to make the Yahoo website more powerful; on the other hand, Yahoo would offer its sale services of all the offerings of Microsoft online by advertising and promoting them.
Microsoft offered several takeover bids to Yahoo last year but at tat time Yahoo rejected all as they did not want to tie up with any company, result of which was that Yahoo had to see the fall of its shares value by 12.1% while the shares of Microsoft rose by 1.4%.This made Yahoo realized that they are scarce of resources and also lack of vision is there which cannot save them .So to come out of this, the agreement would only be the option.
Advantages of this deal to both the companies
Till date, both the companies have not made their expected profits and showed a continuous downfall, So they signed a deal of 10 years which according to them would help both to compete in the market.
For Microsoft, if they do the agreement with Yahoo,
- They would be able to expand their search areas with new innovations.
- Also the advertisers would not pull their hands back as they would be able to get good value for their advertisements.
- Google is dominating the market as it has always taken care of its consumer’s taste and through this deal, Microsoft would be able to capture that.
For Yahoo, as the two will get together, they would have much financial resources with which they can make good investment to better their search engine. For the control of its search engine, for the first 5 years, Yahoo must keep 88% of the income which it would receive from the sale of advertisements on its site. After that only, for the next 5 years, it would have the right to sell the adverts on the Microsoft sites.
This deal would be advantageous for both-the users and the advertisers of Yahoo. The company’s financial and statistical figures would also be better as their estimations show that their operating income of the year would increase by $500 million and could save up to $200 million.
Now the question of staff remains. So some staff would shift to Microsoft and rest of it would remain in Yahoo itself.
In this competing era, to stand in market you have to always come up with new strategies, ideas and innovations otherwise somebody would beat you and your existence would be questioned. This deal would help both companies to keep their existence intact by beating their rival, Google, together.