Part of the problem, Swisher’s sources observe, is that Yahoo is contractually wedded to Microsoft in search for many more years. So Yahoo couldn’t run off with Facebook even if they wanted to.
But therein lies one solution here, actually.
Microsoft should be part of these discussions. Microsoft, ideally, should be convinced to spin out its search division, which it doesn’t need, and have the division managed by Facebook or Yahoo.
But even if Microsoft keeps its search business, Yahoo, Facebook, and Microsoft should all join forces here–and much more aggressively than they have to date. If Facebook makes search much more front-and-centre in its product experience, the combined “Bing/Yahoo/Facebook” search market share will rise some more. And the more it rises, the more useful the platform will become for advertisers. And the more Bing’s revenue per search should begin to rival Google’s.
(One of the big problems with Bing right now, which hurts both Yahoo and Facebook, is that revenue per search is low. This punishes not only Microsoft, but the companies that are forced to work with it.)
Barring a true partnership between the three companies–or, in the event that even this doesn’t drive revenue per search for Bing higher–Facebook should just boot Microsoft out of the partnership and integrate Google instead. Search is far too profitable a business for Facebook to just ignore it. Even AOL is still pulling down $500 million of effortless search profit per year.
And when its Microsoft contract comes up for renewal, or before if possible, Yahoo should do the same thing.
Bottom line, if Facebook and Yahoo aren’t, in fact, talking about getting together on search, they should be. And Microsoft should be a part of those discussions.
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