On Wednesdsay 29th July 2009, Microsoft and Yahoo! announced a ground-breaking 10 year deal in which the Yahoo! search engine would be replaced by a new search engine called Bing. “Through this agreement with Yahoo!, we will create more innovation in search, better value for advertisers, and real consumer choice in a market currently dominated by a single company,” said Mr Ballmer.

“I believe it establishes the foundation for a new era of internet innovation and development” Carol Bartz, Yahoo! chief executive. Yahoo! will get to keep 88% of the revenue from all search ad sales on its site for the first five years of the deal, and have the right to sell adverts on some Microsoft sites. Yahoo! Search will still maintain its own user interface, but will eventually feature “Powered by Bing” branding.

Now we have reached the three month anniversary of Microsoft’s Bing search engine and everyone wants to know whether the partnership with Yahoo! has been a successful venture. Also, has it led to a change in the fortunes of the parent company who have experienced mixed results in the lucrative search market.

Latest figures from the internet data firm StatCounter suggest that Bing had a 9.41 per cent share of the US search market in July, up from 8.23 per cent in June. Google, meanwhile, saw its share dip slightly, from 78.48 per cent in June to 77.54 per cent in July. This is obviously positive news for the duo, but not as positive as they would have liked.

However, a new deal has been signed which will see Bing power all of Yahoo!’s search services. This may help them turn the corner on Google, and begin to bridge the huge gap. Microsoft and Yahoo! enjoy a combined 20.36 per cent share of the search market, said StatCounter, putting them in a much stronger position to challenge Google’s dominance working as a team rather than as competitors.

“Bing continues to make slow but steady progress but the combined Yahoo! figures suggest that the deal announced last week will have to demonstrate major future synergies if it is to make any dent in Google’s dominance,” said a spokesperson for StatCounter.

Google’s global share of the search market fell slightly last month, slipping from 89.8 per cent in June to 89.23 per cent in July.

Microsoft has embarked on an extensive and widespread advertising campaign to spread the word about its revamped search engine, which launched in May. Bing’s debut features a $80 to $100 million online, TV, print, and radio advertising campaign in the US (and even larger globally).

The advertisements do not mention other search engines competitors, such as Google and Yahoo, directly by name; rather, they attempt to convince users to switch to Bing by focusing on Bing’s search features and functionality.

Yahoo!’s chief executive, Carol Bartz, admitted this week that Yahoo! didn’t invest heavily enough in search.

The 10-year deal between Yahoo! and Microsoft should help to address that problem, she said. Both parties will hope that this is the case, and remain focussed on closing the gulf between themselves and Google in the search market.