For a long time now, the big three search engines in the American market have been Google, Yahoo, and Microsoft. Google is the top search destination by far with over 65% of the U.S. search market. Microsoft has been working hard to catch up to Yahoo and Google in the search market, and is trying to grab a larger share of the huge online advertising market.
EWeek reports that the European Commission is expected to approve the Microsoft and Yahoo search deal that was first announced back in July 2009 later this week. The deal will see Microsoft's Bing search engine replace the Yahoo search engine on the Yahoo website.
Under the deal, Yahoo would retain its look and feel with Microsoft serving all search results behind the scenes. The deal would see Microsoft pay Yahoo 88% of what it costs to acquire traffic that is generated on the Yahoo site for the first five years of the ten-year search deal. In November 2009, Microsoft and Yahoo announced that they intended to take the partnership to Europe as well. If the EC approves the deal this week, it might put new pressure on the DOJ in the U.S. to approve the deal as well.
The self-imposed deadline for the EC to approve or deny the Yahoo-Microsoft deal in Europe is February 19. However, the EC could elect to extend its inquiry if it feels the deal might harm rivals in the search market.
If the deal goes through as expected, the combined Yahoo-Microsoft search engine will hold 28% of the search market making it a distant second place to Google.
The DOJ is reportedly looking at Microsoft's investments in Bing and details of the search deal including pricing for advertising. The Association of National Advertisers has issued a letter supporting the Yahoo/Microsoft deal. The association hopes that increased competition will result in lower advertising costs on Google and other online advertising programs.