Microsoft casually announced a new search and search ad deal at the end of Steve Ballmer’s analyst presentation today. Microsoft gave next to no details about the pact, but the Wall Street Journal has gone ahead and declared that the deal “could pose a threat to Google“.
How so? Last we looked, Google was crushing the search market, with Microsoft a very distant third.
Will adding Facebook’s audience – 90 million users worldwide – help Microsoft pick up a little bit of share? It’s possible. But it’s hard to see it moving the needle that much — Facebook is a large social network, but in the grand scheme of things it’s not that big. At least not yet.
Some perspective: comScore, which also tracks searches on sites that don’t actually have Web search engines — like Facebook — says that Microsoft had 68.9 million unique U.S. “searchers” in June. Facebook had 16.3 million. We don’t know how many of those are duplicative, but for argument’s sake, say none of them are. Let’s also say that every one of Facebook’s “searchers” starts using Microsoft’s engine when they want to scour the Web (which will never happen: Lots of those folks will use Google via their toolbars or just go to the site directly). That would increase Microsoft’s core search base by 23% — at best, enough to increase its share by a few points.
Meanwhile, while we don’t know what Ballmer paid for the deal, it almost certainly didn’t come cheap. Microsoft probably will not get more than a 15% payout per search, because that’s about the split they offered another big potential distribution partner, Yahoo.
Bottom line, it’s more distribution for Microsoft’s search platform, which is a positive. But it’s hard to imagine that it’s a game-changer. Which might be why Ballmer didn’t deliver the news himself, but left it to a VP.