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What Does the Yahoo-Microsoft Partnership Mean for Advertising?

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CNBC.com

It's been a year in the making, and now finally Yahoo and Microsoft are teaming up to take on Google's dominance in search.

Alone neither Yahoo nor Microsoft had a chance against Google, but the tech and web giants 10 year search ad deal gives them a real opportunity to compete.

This isn't just jockeying between longtime rivals, this could have a huge impact on billions of dollars of search ad spending - $10 billion was spent on U.S. search alone last year.

WPP Group CEO Sir Martin Sorrell told me he's delighted about this deal, anticipating it could result in better pricing for clients. He said "we think it brings better balance to the search marketplace. Anything that brings better to the search marketplace will be welcomed by our clients, and will be welcomed by regulators as well." Sorrell figures that a stronger competitor to Google will create a more dynamic marketplace. He also said that he thinks AOL's new leadership, CEO Tim Armstrong, will make AOL a stronger competitor, which will also be good for the marketplace.

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But not everyone agrees that this would necessarily be good for the marketplace. For one thing, Google has quite a bit of time as the Microsoft-Yahoo deal gets regulatory approval, and then has an advantage as the two companies work out the integration of their teams and technology. And when you combine Yahoo and Microsoft's current U.S. marketshare, it's still just about 28 percent, nothing compared to Google's 65 percent U.S. marketshare. And Google has even more dominance overseas.

Theoretically, some real competition to Google could be great for ad buyers. The question is whether federal regulators think this merger will promote competition. And assuming the deal does move forward, we'll see if Google takes any steps in the meantime to secure its dominance.

What they're saying about Yahoo/Microsoft:

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