Yahoo-Microsoft Search Tensions On Public Display In Court Ruling

Microsoft has essentially had to sue Yahoo to get the company to fully comply with the terms of their 2010 “Search Alliance” agreement. Yahoo under Marissa Mayer had sought to delay rollouts of Bing search results in Taiwan and Hong Kong, awaiting a new Microsoft CEO.

Microsoft CEO Steve Ballmer resigned ahead of schedule under board pressure because of a growing sense that Microsoft’s core businesses were increasingly under siege and the company wasn’t making sufficient headway. Former Nokia CEO Stephen Elop is arguably the leading candidate to succeed Ballmer.

Regarding the Bing rollout, Microsoft successfully arbitrated under the contract but was compelled to defend that result in court. Based on a court ruling handed down on Monday, Yahoo must now implement Bing search results in the remaining two global Yahoo markets that have yet to be transitioned to Bing results.

Mayer has publicly expressed frustration with the Microsoft deal in the past. She inherited it from predecessor Carol Bartz, who aggressively tried to cut costs by outsourcing content creation and non-essential (or too-expensive) functions. Indeed, many institutional investors and financial analysts had long put pressure on Yahoo to outsource search to a third party.

The combined “Search Alliance” market share has essentially been flat (28 percent – 29 percent) since the announcement of the deal in February 2010, though Bing’s share has grown largely at Yahoo’s expense. Most of Yahoo’s key search personnel went to Microsoft following the deal.

Here’s what US search market share looked like in September 2010:

Here’s what it looks like today according to comScore:

Bing’s search results and user experience have continued to improve, while Yahoo has largely stagnated. However recently Mayer has been investing in upgrading the UI and mobile search experience on Yahoo, with some apparent traffic uplift.

The Yahoo-Bing deal, unless mutually abandoned or modified by the parties, is scheduled to last until 2020. It remains to be seen how the next Microsoft CEO approaches Bing and search. However Bing has been deeply integrated into Windows 8 as a core feature.