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A Microsoft-Yahoo! merger: good for the Internet?

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"Search is not really a business that has those network-effect characteristics," argues Jonathan Weber, former editor in chief of The Industry Standard magazine. Much online advertising is currently tied to the results returned by search engines, which has given Google a huge lead – for now.

Mr. Weber recalls an Industry Standard conference in 1999 where insiders ridiculed Google, then a start-up. Their reaction: Why would we need another search engine? We already have Yahoo! and Inktomi and Infoseek and AltaVista. Google's answer: We think we're a better search engine.

The moral of the story, says Weber, is that the moment a better search technology comes along, Google – or a Microsoft-Yahoo! combo – could tumble.

An edge in contextual ads

Google currently handles 56 percent of all US searches, versus 32 percent for Microsoft and Yahoo combined, according to data from Nielsen, an audience metrics firm.

Google's lead in another form of online advertising known as contextual advertising is similarly not fixed in stone, say some experts. Contextual ads are placed on the fly by Google onto third-party webpages whose content matches keywords given by advertisers. So, air travel companies, for instance, might place ads for keywords like "honeymoon" or "vacation," and Google will find pages that seem focused on those topics and place the ads there.

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