Google Search Network Partners – Biggest winners of MSFT/YHOO alliance?
As the dust settles following the EC and DOJ approval of the alliance between MSFT and YHOO, much is being said about the larger implications related to search engine market share and the likely impact on Google, Microsoft and Yahoo. What seems to have been overlooked is the potential impact on the earnings of America Online (NYSE: AOL) Infospace (Nasdaq: INSP) and even the smaller players like Vertro (Nasdaq: VTRO) and Answers.com (Nasdaq: ANSW), all members of the “Google Search Network” that provide Adsense revenue that ranges from AOL’s $550 million on the high end to Vertro’s $30 million per year on the low end.
When MSFT begins its siege in earnest, it seems logical that an assault on Google’s Adsense network might be on tap. Not unlike Google’s launch of Google Doc’s which began a broadside attack on MSFT’s primary earnings engine, a strike on the largest revenue growth vehicle (Google Adsense revenue grew much faster than the rest of the company in Q4 2009) in the Google arsenal seems all but certain. While MSFT obviously has the war chest to simply acquire strategic members of the Google Network, it seems even more likely that they would seek to lure all of them away with higher rev share agreements and/or minimum search revenue guarantees that will accomplish the dual goals of increasing MSFT’s search market share while striking at the heart of Google’s biggest revenue growth machine. In either case, it would seem that those companies who are producing large revenues through their participation in the Google Search Network may be among the biggest winners of the new MSFT/YHOO war with Google as the bidding should certainly result in higher payouts and/or a generally higher value accruing to each company for any given search advertising revenue stream.
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