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Microsoft Opens up the Search Market?

It has been almost a week since Microsoft put a deal on the table for Yahoo! to consider. While we don’t seem to be hearing much yet from Jerry Yang and his board of directors the rest of the industry has plenty to say – especially Google.

Google is vocal but not quite uniform in its response. One minute, MD for UK Sales Mark Howe is welcoming the competition and the next, senior vice president David Drummond is appealing to competition commissions that a merger will give rise to unfair dominance.

Naturally, the online marketing community is welcoming a long overdue challenge to Google’s advertising strength but there’s more to this bid underlying Google’s concern than many realise. Focus has been placed on the online applications side of a deal but Microsoft has for a while now been developing its demographic ad/search capabilities and has only one rival in this area – Yahoo!.

It is difficult to get hold of accurate figures, but Wikipedia cites Windows Live Hotmail as having 260million accounts in existence which means a hugely valuable database of user information activated when users browse after login. In recent statistics, comScore places Yahoo as the web mail leader with 255m accounts so while something is a little awry it is clear is that Microsoft – with the addition of Yahoo’s user data would indeed be a very formidable force in the digital advertising market.

With Google’s sign up email (gmail) tiny in comparison, the ability to target ads to the right demographic is one of Google’s weaknesses within the market. And with the search leader’s DoubleClick acquisition moving forward Microsoft needs to do something to avoid being left behind entirely. The Yahoo! bid brings it back in the eyes of all involved as a force to be reckoned with.

I for one am very excited about how this will develop over the coming weeks and months.

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