A lot can change in 10 years.
A decade ago, for example, Yahoo!'s ( YHOO - news - people ) search back-end was powered by a start-up called Inktomi, which was the hot "search" start-up of the late '90s. Just over nine years ago--on June 26, 2000--Yahoo! switched its search back-end to another up-and-coming search start-up called Google ( GOOG - news - people ). During all this time, Yahoo! wanted to focus on being a destination--providing a directory and all sorts of services on top of search--in the form of a "portal."
In late 2002, Yahoo! finally decided that portals were old news and the new game was "search." It began to see how successful Google was on its own and decided it needed a full search strategy in-house, rather than outsourcing it to what increasingly looked like a competitor. To accomplish this it bought up many of the other players in the market, starting with its spurned former partner Inktomi, followed rapidly by Overture, which itself had recently purchased granddaddy of Web search AltaVista as well as another up-and-comer called AlltheWeb out of Norway. This led to a rather uncomfortable co-existence with Google until early 2004, when Yahoo! confirmed the inevitable and dropped Google as its search engine partner.
That's a lot of churn in a short period of time as Yahoo! tried to adjust to a rapidly changing market--unsuccessfully. So what are we to make of the news that Yahoo! has now gone back to outsourcing, and handed its search back-end over to Microsoft ( MSFT - news - people ) for 10 years?
Yahoo!'s reasoning for buying up Inktomi, Overture and so on was a misguided strategy of playing catch up. It thought that "search" had become the game, instead of "portals," but search was never the real game. The real game was relevance. Provide relevance to an audience and they will stick around, and there are all sorts of things you can do to make money with a large enough audience looking for relevant content.
Looking at Yahoo!'s new deal with Microsoft, it looks like it's still fighting that last battle. It's still playing catch-up. It's still looking for search market share, rather than relevance. The search battle is no longer a battle at all. Microsoft may have built a quality search engine in Bing (the reviews are lovely), but for most people, Google is good enough. The battle is over in search. There's no reason to shift to another player, because there's very little discontentment with what Google provides. Microsoft (and now Yahoo!) may pick up some users on the margin, but the market for search is no longer interesting or particularly important.
The battle is already shifting. Social networks and social communication services like Twitter are starting to creep onto Google's "relevance" turf. An increasing amount of traffic is driven by social networking communications, as a "recommendation from a friend" is often a lot more trustworthy than a "recommendation from an algorithm." There's talk of "real-time search" being key, but it's really all about relevance. People gravitate to where the relevant content comes from, and it's increasingly from sources other than search. The value of relevance through communication (what some are calling "earned links" or "passed links") is growing. Focusing on search doesn't even begin to approach that challenge. In fact, it significantly distracts from that challenge.
People are discovering that information finds them, rather than them going in search of information. Search already works. The next interesting challenge is in improving the way information finds you, rather than the way you find information.
By acting like search is still the underpinning of everything, and then locking in a relationship with Microsoft for 10 years, Yahoo! is preparing for a fight that already ended years ago. Even worse, add in the time it will take to finalize the deal, get regulatory approval and handle implementation, and they won't even be ready to fight that old "battle" for another few years, by which point it will be even more clear that the real action is in a totally different place.
A lot can change in just 10 years. It's hard to see the value in Microsoft and Yahoo! tying themselves together, for that length of time, to fight that old battle, just as everyone else is starting to shift their focus elsewhere.
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