MSN/Yahoo! Deal A Good Thing?

With a proposed purchase of Yahoo! by Microsoft on the table, it's possibly only a matter of time before the 'big three' search engines get narrowed down to just two. While there's certainly other competitors in the field, their overall market share remains insignificant when compared to MSN, Yahoo! and the infamous Google.

With Google's market share in the search engine world continuing to grow, the move may in fact be necessary for both Microsoft and Yahoo! if they are to remain competitive in the industry. Even combined; their percentage of the market will still remain smaller than Google's in most markets, however leveraging their existing properties with one another could help them reverse the trend in a couple of ways...

Unifying technologies while cutting down on costs:
As it stands both MSN and Yahoo retain their own individual search engines... when merged that may no longer be the case. While it's rumored that both search portals would remain in tact individually, chances are good that their search technologies would be unified at least to some degree (hopefully with each portal taking the best from both worlds). In doing so I'm sure there would be some cost savings as a result, as there would be less redundant development required once unified.

Increased revenues from advertisers:
While some people insist that the individual costs of advertising shouldn't 'scale' based on market share, the reality is they do. The majority of CPC (cost-per-click) advertising venues work on a bidding system, which means advertisers offer to pay more to get better exposure. The bigger the market is, the more advertisers are attracted to it - in turn driving up the costs as the larger pool of competition continues to outbid one another.

Were MSN and Yahoo! to offer a unified advertising solution across both search platforms, they would inevitably draw more advertisers in; which in turn would boost the CPC rates for both properties.

Personally, while there's no doubt the search technologies were somewhat primitive - I still miss the good old days when the market share was distributed more evenly over a good handful of search engines like AltaVista, Excite, WebCrawler, and the like. That's not to say Google doesn't deserve to be where it is today, but I'm not a big fan of one company essentially developing a monopoly when it comes to controlling information delivery.

And so, while I'd prefer to have more individual players in the market, I'd still much rather have two large search engines competing with one another than continue to watch Google reduce the competition to virtually nothing - and Microsoft acquiring Yahoo! may enable just such a things to happen.