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Microsoft finally persuaded Yahoo to surrender control of the Internet’s second most popular search engine and join it in a daunting battle — taking on the overwhelming dominance of Google in the online advertising market.

A 10-year deal announced Wednesday gives Microsoft its best shot yet to show its new search technology, Bing, is as good as or better than Google’s. Microsoft also hopes to use Yahoo to divert sales from Google, which generates more than $20 billion a year from ads.

By spending less on its own search technology, Yahoo expects to boost its annual operating profit by about $500 million — but not until 2012, when the two companies expect to have all the pieces of a complex technological puzzle in place.

“I am very enthusiastic,” Ballmer said in an interview. “This is what I have basically been saying for the past 18 months: The world will be better served for consumers, advertisers and publishers, and there will be more competition for Google, if we can somehow figure out how to get Microsoft and Yahoo together in search.”

Like Yahoo, Microsoft has invested billions in search technology during the past decade. Yet it remained a distant third in market share while its online losses piled up. Microsoft is counting on Bing, unveiled last month, to turn things around. Bing has been getting mostly positive reviews and picking up slightly more traffic with the help of a $100 million marketing campaign. Analysts believe the successful debut pushed Microsoft to reopen negotiations so it could expose its search engine improvements to a wider audience.

While Microsoft and Yahoo await government approval of their partnership, there is no doubt Google will try to increase its lead by upgrading its own search engine, said Danny Sullivan, editor of the online newsletter SearchEngineLand. Already, Google is going after Microsoft’s bread-and-butter business of software for personal computers. It’s working on a free operating system for inexpensive PCs, a move that could threaten Microsoft’s Windows.

The Microsoft deal with Yahoo will allow the both to have about 30% of the world’s total search market share (according to some reports - i.e. ComScore). It still is a far cry from 65% held by Google - but I think that that 30% might just increase. It will also change the dynamics of the search marketplace globally - and also in Asia. With this deal, Google’s dominance is going to be a little less - well - dominant, and threatened.

Source: Yahoo Finance

GoogleGoogle’s always been in heated competition with Microsoft. We thought that the competition was becoming hot again when the company behind the dominant Windows OS launched their new search engine Bing with much fanfare. But that may be nothing compared to the bombshell Google just dropped.

Google announced on their blog tonight that they’re releasing an operating system: Google Chrome OS. While the company already has a mobile operating system in AndroidAndroid, this new one will be based off of ChromeChrome, Google’s web browser.

According to Google, the open source OS will available later next year and is primarily targeted at netbooks to start. From the Google blog:

“Google Chrome OS is an open source, lightweight operating system that will initially be targeted at netbooks. Later this year we will open-source its code, and netbooks running Google Chrome OS will be available for consumers in the second half of 2010. Because we’re already talking to partners about the project, and we’ll soon be working with the open source community, we wanted to share our vision now so everyone understands what we are trying to achieve.”

It is designed to be a lightweight system, just like the Chrome browser. Unfortunately, Google didn’t divulge many other details, and it will be a while until anyone gets their hands on it. Clearly though, Google’s setting the stage for a major battle with Microsoft. Just as Microsoft is trying to break Google’s stranglehold on the search engine market, Google may be trying to do the same with the Windows-controlled market.

Sources: Mashable & Google

Microsoft on Thursday revealed their new search engine: Bing (the rebranded and rebuilt search engine formerly codenamed Kumo, designed to replace Live Search). It’s a solid improvement over the previous search product, and it beats Google in important areas. It will help Microsoft gain share in the search business. It’s surprisingly competitive with Google.

Bing isn’t available to the public yet, but you won’t have to wait long. Starting on June 1, some users will get Bing search results from Live Search. On June 3 Bing will be Microsoft’s new default search. We got early access to the service. Here’s is some first takes on how it looks:

• In search presentation, Bing wins. It uses technology from Powerset (a search technology company Microsoft acquired) to display refined versions of your query down the left side of the page. For example, searching for the game “Fallout 3″ on Google and Bing. While Google gave good results, Bing gave a menu of “related searches,” that included Walkthrough, News, and so on. Bing also pop ups an excerpt of the text on a search result if you hover over it. This saves a lot of time if you’re not quite sure if you want to follow a result.

• In the content of search results, Bing is not consistently superior to Google. In many searches Rafe Neddlemann (Cnet) and Greg Sterling (Searchengineland) did, the Google results were more relevant and useful. Not by miles, mind you, but in many cases Google delivered the goods just enough better than Bing to make me question the wisdom of adopting Bing as a replacement search engine. Just one example: Searching for “Best house paint for humid climates” gave me better advice links at the top of the search results with Google than with Bing.

• When searching for product reviews, Google’s search result pages were mostly better than Bing’s — although, again, not by a lot. However, Bing also collates user and expert reviews on many products, and this gives you a great overview. This feature doesn’t always show up, though; and I wouldn’t even have known about it had it not been for the Wired review of Bing.

• When you want to shop for an item, both services have very strong “shopping” tabs that organize results well. Google gives you seller ratings, which Bing doesn’t. But Bing offers a cashback program, which is hard to beat.

• And in some searches, Bing won on results outright. When searching for “Facebook sandberg” on Google, the top link was a story from 2008. On Bing, the top item was “News about facebook sandberg” with three sublinks to very recent articles. When searching for “Obama Supreme Court,” Google did show news results, but the top link was a day-old story. Bing’s was from 32 minutes ago. (To be fair to Google, you can also click through to Google News on any result and sort results by date. But that’s extra clicks. Bing is more aggressive about including news.)

• All search engines have their strengths, and many of Bing’s lie in areas where Microsoft has its own content companies. For example, Microsoft owns the airfare prediction service Farecast, and it includes Farecast buying advice whenever you search for airplane travel. Bing also displays some medical data inside the search engine itself.

• Bing also does very well in at least one area where Google should do better. The video search result page for “Thomas Jefferson” in Google gives you a vertical list of videos. On Bing, you get a big grid that’s easier to scan, and a list of related videos on the left for “George Washington,” “James Madison,” and so on. The search results are about equivalent, but Bing’s presentation is far superior.

• For further search examples and comparision have a look at: searchengineland.com and Cnet.com

Summing it up: The new game in search is parsing information and displaying it in the engine itself (see Wolfram Alpha for the extreme example of this). Both Google and Bing, and other search products, have areas where they will collate and format information for you, instead of just linking you to external pages where the data reside. Bing does an extremely good job at this in several popular areas — like product reviews, movie listings, weather, travel, and stock prices.

While the service doesn’t reveal all its riches at once, it rewards exploration and yields pleasant surprises to users who poke around. Google keeps improving in the area of in-search collation and display as well, but Bing makes Google look complacent, and that’s not good for Google. For the moment, Bing’s on top in this game.

Microsoft is also set to launch a campaign for Bing. The campaign is expected to be an $80 million to $100 million effort. Those numbers are astronomical when considering Google itself only spent around $25 million in advertising all last year. But Microsoft’s current share of the search engine pie is relatively small. So they are going to have to make a big splash to make any sort of headway against Google and Yahoo, who dominate that vast majority of internet searches…

Go check out Bing here: http://www.bing.com (or at least some information about it ) and check out this video explaining how it works:

Sources: techcrunch.com, Cnet.com, Bizzia.com and searchengineland.com