The first volly in new internet way

Finally, after endless rumour, boundless speculation and countless megabytes of blogging, Yahoo! and software giant Microsoft have finally agreed terms for a back-scratching deal.

On paper it seems like the perfect way to challenge the increasing dominance of Google – Microsoft has had little success in its expensive efforts to capture a decent search audience; Yahoo! has struggled to make a profit.

So, under the deal announced this week, Microsoft's Bing search engine – has anyone actually used this – will power the Yahoo! web portal, and in return Yahoo will become the advertising sales team for Microsoft's online offering.

The combined forces of Yahoo! and Microsoft could potentially become a major threat to the ubiquitous all-conquering, revenue-hungry profit monster that is Google.

But, ostensibly, the Yahoo!-Microsoft tie up is far, far, far from enough to wipe Google off the internet map. Indeed, much of the power of Google lies in the power of its brand and the place it has secured in the public consciousness. "Google" as a word has become a synonym of searching for anything on the web. It is both proper noun and verb.

What we have seen in the past couple of days, triggered by the tie-up, is the first volley in a new war for internet dominance, a war in which Microsoft wants to be victorious.

Hot on the heels of the multi-million dollar ten-year Yahoo!-Microsoft deal and Microsoft announced the launch of a United Kingdom service that will stream full-length videos of television shows for free.

The advertising-funded MSN Video Player will be available from next week and will include more than 300 hours of shows.

British demand for online video sites has shot up over the past year, according to research firm Hitwise, with UK internet traffic to video websites up 40.7 per cent. YouTube is the most popular destination, followed by the BBC iPlayer and Google Video.

Now, who could this be a challenge too? YouTube is the number one video-content site in the world, and in the US it is possible to stream full-length television shows through the site. YouTube is owned by Google. Coincidence? Hardly.

Microsoft is a leviathan organisation and has, by its own admission, been slow to react to the threat of "cloud computing" – it's business model has for decades been shaped around flogging PC-based applications for home and office use.

Now, with its almost unlimited funds and bargaining power, and with Apple increasing its march in the fields of personal entertainment gadgets, Microsoft is making fresh inroads into areas dominated by Google, and to a lesser extent site such as Hulu. This is just the beginning.

What remains to be seen, once the latest battles are over, is who will be left standing and what impact such consolidation will have on the you and me, the people who use the internet.

- What do you think? Write to online@business24-7.ae

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