A Yahoo-Facebook Search Engine Would Be A Brilliant Move For Both Companies--Here's Why...........
"This would be a smart strategic move for both companies. It could also drive billions of dollars to both companies' bottom lines.
And it would finally allow the world to create a strong No. 2 to the Google search juggernaut, which would be excellent for consumers, marketers, and third-party distribution partners alike.
(If Facebook and Yahoo don't actually want to build their own search engine, they could also just switch to Google for monetization. This, too, would radically increase their bottom lines.)
We'll run through some numbers below. But first, here are some broad strokes:
Search is the best advertising business in the history of the world, by a mile. It is a vastly better business than the digital brand advertising business that Facebook and Yahoo are currently in, though that's a good business, too.
Search is also a fantastically profitable business when you have built-in distribution--but the key is that distribution. Google has distribution: Most people think "Google" when they search. That's why Google's minting money. Microsoft doesn't have distribution for Bing, so it has to buy it from Yahoo, AOL, etc. That's why Microsoft's getting killed.
Together, Yahoo and Facebook have huge global distribution. If both companies made search a priority in their products, they could grab a significant chunk of the market.
Unlike Microsoft, Yahoo and Facebook--especially Facebook--also have excellent positions in mobile, which is where the digital world is going. Microsoft is nowhere in mobile. Facebook is used by 500+ million people per month on mobile. Yahoo Mail and Yahoo are used by several hundred additional million people.
Microsoft is impressively dedicated to search, but it has lost more than $10 billion on its search business so far and it seems extremely unlikely that search will ever become a meaningfully profitable business for the company. This will be especially true if Yahoo and Facebook team up together. If that happens, Microsoft's search business is toast.
Instead of continuing to bang its head against the wall, Microsoft should contribute to the Facebook-Yahoo partnership by contributing its technology in exchange for stock.
The details of who would actually be responsible for a Facebook-Yahoo search engine--who would pay for and manage the technology and engineering, who would manage the relationships with advertisers, etc.--would be critical to any successful effort. If the companies partnered and did a half-assed job, the effort would fail miserably."