If Microsoft Wants Yahoo's Mobile Search, They'll Have To Earn It

Staci D. Kramer
Wednesday, July 29, 2009; 11:00 PM

Updated: Following Microsoft's search and advertising deal with Yahoo (NSDQ: YHOO), Microsoft (NSDQ: MSFT) could be the largest mobile search provider in the U.S., having deals with three of the four major U.S. wireless carriers spanning 200 million subscribers. The one exception would be Sprint (NYSE: S), which uses Google's search for its 48 million subscribers. On the carrier side in the U.S., Yahoo has deals with AT&T (NYSE: T) and T-Mobile.

But clearly, Microsoft will have to prove itself to Yahoo when it comes to the mobile industry, which is just beginning to show its full potential. In this morning's call, we learned Microsoft's Bing will be used for Yahoo's mobile sites, however, the arrangement is not an exclusive, meaning that Yahoo could eventually choose another partner if it wanted. Also, it may choose different options on a country-by-country basis. [Editor's note: this has been updated to provide more clarity.]

In an interview this afternoon with Microsoft SVP Yusuf Mehdi and Yahoo EVP Hilary Schneider, we asked for more details. Edited excerpts of their comments on mobile follow; you can read the rest of the interview at sister site paidContent.org.

Why isn't mobile exclusive as part of this deal?

Schneider: As you know, Yahoo is a leader in mobile, not only in terms of innovating the consumer experience, but in terms of the breadth and depth of partnerships we have on a global basis. We think that the mobile sphere in general is nascent and rapidly changing, therefore to create an exclusive relationship at this point in time just felt like early innings. We like the structure of this relationship, which allows us to be non-exclusive with Microsoft. We can begin to learn together and as we innovate our own mobile experience going forward, we'll have the option to move to an exclusive relationship if we decide that makes sense.

Yusuf, is there anything Yahoo is doing with mobile that you want to include?

Mehdi: In terms of technical work that they're doing? They've done a lot of great work and deserve kudos for that. I think, to be honest with you, we have our hands full just trying to continue to pioneer and catch up with some of the pieces we've been doing with our own mobile search client. The good news right now is for me, the blocking factor is really just more time in the day to deliver on all the great ideas that we have ourselves. I think we feel good about the technology platform we've got. We think there's a lot of good ideas out there by others and you'll see us innovate at a very rapid pace.


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