Will Yahoo Torch its Search Deal With Microsoft, Outsource Search to Google?

Google Bing Yahoo logosYahoo will layoff thousands of employees this week as part of a major company restructuring. Yahoo is also looking at possibly getting out of search altogether, AllThingsD reports. Is the Microsoft-Yahoo Search Alliance on life support?

Microsoft, Google & Yahoo Search

The two big rumors: Yahoo is discussing a renegotiation of its search and advertising deals with Microsoft, and Yahoo is “in active discussions” with Google about Google taking over Yahoo’s search business.

Search Engine Watch contacted Microsoft when this news broke late last week, but they had no comment.

Yahoo and Google have some history. Google and Yahoo struck their first search deal back in 2000, and powered Yahoo's search results until Yahoo went independent in 2004.

Later, Yahoo agreed to partner with Google on advertising in 2008. This attracted the attention of the Department of Justice, and Google pulled out of the deal later that year over broader antitrust concerns and fear of being labeled a “monopolist”.

Less than a year later, Microsoft and Yahoo struck a 10-year search deal in which Bing would power Yahoo’s organic search results and Yahoo would sell search advertising, with adCenter being the self-service ad platform for both companies.

Bing has been powering Yahoo’s U.S. search results since August 2010. Microsoft adCenter began powering paid search for both companies in October 2010.

Yahoo's share of search has been shrinking in recent months, though 2.4 billion searches were conducted on Yahoo in February, according to comScore. Bing overtook Yahoo to become the second most popular U.S. search engine for the first time in December 2011.

Yahoo Layoffs & Restructuring

As for the “many thousands” of layoffs, which could begin this week, products, research, and marketing will be hardest hit as Yahoo aims to drastically cut staffers from its 14,000 workforce. Sadly, layoffs are nothing new at Yahoo.

Though one of the rumors has Yahoo gone from search completely, AllThingsD also notes that search business, along with communications, could end up being part of a “global media division” within the new Yahoo structure, potentially being run by Senior VP Shashi Seth.

Nothing is set in stone at this point. Perhaps we’ll learn more on the restructuring next week.