Microsoft Bing Now Powers Yahoo Search

When Microsoft and Yahoo hinted at a possible alliance 13 months ago, few believed the tandem would work. What further put the merger at jeopardy was an unsuccessful attempt by Microsoft to capitalize on Yahoo's financial difficulties and overtake their counterpart with a proposed bid in 2008.

Since then, alliance talks were put on the back burner -- until now. Microsoft is currently powering the search engine on Yahoo's website in the US and Canada (with the shift in other countries planned for sometime in 2011/2012).

The two companies have come to terms on an agreement that serves one sole purpose: undercutting Google's dominance of the search market. (Source: yahoo.com)

Both Microsoft, Yahoo Benefit From Agreement

The agreement will favor both parties. While earning small gains with each passing month since its creation, Yahoo looks to lean on Microsoft's Bing search engine in an effort to lower expenses and focus on other products. The company is desperately attempting to break a streak of financial losses that have since depressed their stock prices. (Source: odt.co.nz)

Microsoft, on the other hand, has something to benefit from Yahoo as well. In addition to picking up more traffic from Yahoo, the company hopes to get better insight when researching the direction and patterns of search queues.

Sense of Defeat At Both Ends

Not everyone, however, sees the benefit of a Microsoft-Yahoo axis. Some analysts have noted that the alliance symbolizes a sense of defeat at both ends.

The reasoning is based on the fact that Yahoo has retained their autonomy, meaning that an attempt at a complete corporate takeover by Microsoft was, by all intents and purposes, quashed. At the same time, Yahoo's reliance on the Microsoft Bing search engine means that the company must now support a search engine that was once seen as a fierce rival.

Still, if all goes according to plan for Microsoft and Yahoo, the company that stands to lose out in the end is Google.