The first sketch of the 10-year search partnership deal between the software giant Microsoft and the online portal Yahoo blurts out a trifle competition in the search market. Microsoft’s Bing would replace Yahoo’s search engine after the deal. The combination of the two giants is mainly aimed at taking on the search giant Google who holds 65 percent of search market share, which accounts for more than double of Yahoo and Microsoft’s combined 28 percent share.

Under the Co-petitive move, Yahoo is offered 88 percent of the revenue gained from searches on Yahoo sites, while Microsoft gets to use Yahoo search technology in its own search platform Bing. Microsoft treaded cautiously without any upfront payment to Yahoo, which was a severe disappointment among investors. The result was, Yahoo’s shares crashed after the deal was announced. The deal turns more profitable for Yahoo in the long run, whereby it expects to gain $500 billion, which is more than the profits that it expected from its botched search deal with Google in 2008. There are possibilities that the Yahoo-Microsoft deal turns around with a similar fate under the severe anti-trust scrutiny that broke Google-Yahoo’s search ad deal in 2008. Herbert Hovenkamp, Anti-trust Law Professor at the University of Iowa says, “In many cases, courts have shot down deals between the second and third-largest players in other industries.”

The deal, which is not expected to be completed till the end of 2010, is yet to make a strong impact on Google. The unconcerned attitude of Google could remain the same even if the Yahoo-Microsoft deal succeeds to cross the anti-trust bodies’ net. While the combined force could shake some shares out of Google, the bigger threat lies for the advertisers. The ad space consolidation and advertisers competing for the same ad positions could drive up costs. Google’s new Caffaine, the ad-ranking optimization engine, may alter the current ad rankings of companies, and adds to the advertisers’ woes. The scenario remains bleak in the mobile Internet ad space, where the space is more limited than the Internet.