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Yahoo Is Inviting Partners to Build on Its Search Power

Miguel Helft|The New York Times
Thursday, 10 Jul 2008 | 10:38 AM ET
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Unable to beat Google in the Web search business on its own, Yahoo is trying a new approach.

Yahoo wants to enlist a small army of search start-ups as allies in the hope that collectively they will be able to stop the Google juggernaut, whose share of Web searches keeps growing.

To do so, on Thursday Yahoo is opening its search technology and powerful data centers to other companies, allowing them to build new or customized search engines without having to make the huge investments needed to develop a search service from scratch.

Yahoo, in turn, will sell ads on those new search engines; if some grab even small slivers of the search market, Yahoo will share in their success.

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Yahoo Center

Yahoo’s future remains uncertain. Hoping to seize on growing shareholder dissatisfaction, Carl C. Icahn, the activist investor, is trying to wrest control of the company from Yahoo’s board and management team. Microsoft might renew its bid for Yahoo if Mr. Icahn succeeds.

Yahoo executives said they had high hopes for the new strategy, which they call Boss, or build your own search service.

"Over the course of years, we want this to be much more than a blip," said Prabhakar Raghavan, head of research and search strategy at Yahoo. Mr. Raghavan showed a pie chart in which a hypothetical collective market share of the new search engine had grown to be comparable to Yahoo’s own. He joked that the chart was a "pie in the sky" and would not discuss actual market share estimates or timelines.

Yahoo had 20.6 percent of all searches in the United States in May. Google’s share was 61.8 percent, three times as large.

Analysts said Yahoo’s strategy was clever but added that many elements of the plan, like the terms of the business relationships between Yahoo and its partners, had yet to be defined.

"This is being done as a public-facing move to show that Yahoo has an idea for how to get traction in online search," said Allen Weiner, an analyst at Gartner. "The overall concept is very sound. But it is way too early to determine what kind of impact it will have."

Mr. Weiner said it was unclear how many developers would embrace the idea of building new search services on top of Yahoo’s. As of now, two start-ups, Me.dium and Hakia, have signed up to use Yahoo’s search technology.

Me.dium offers a service in which users can see what Web sites their friends are visiting. That allows the company to collect information about what sites have "buzz" at any given time, said Kimbal Musk, the company’s chief executive. Me.dium will use that information to rearrange and supplement Yahoo’s search results, creating a service that captures the "social zeitgeist" of the Web, Mr. Musk said.

A search for "Barack Obama" on Yahoo, for instance, returns a set of news articles, followed by the candidate’s official site and an entry from Wikipedia. On Me.dium, whose search service is still in a test phase, the top results include the candidate’s official site, followed by a popular YouTube video of Senator Obama dancing on "The Ellen DeGeneres Show," followed by Obama-themed images for PC desktops.

"We think that for a good percentage of searches, we’ll get people to where they want to go a lot faster than regular search engines," Mr. Musk said. He said it would have been impossible for Me.dium to create a search service on its own.

Yahoo estimates that it would cost $300 million to build a search service from scratch.

Google has allowed Web sites to customize its search results, but not nearly to the extent that Yahoo is doing with Boss.

Yahoo executives acknowledged that the new strategy, if successful, could cannibalize Yahoo’s own search business. But they said that if a search start-up became popular, it would probably take more users away from Google than from Yahoo, as Google has a far larger share of the market.

"We did a lot of analysis," said Bill Michels, senior director for Yahoo’s open search platform. "We are comfortable with the risks associated with it."

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