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Microsoft-Yahoo deal: a costly distraction?


Paul Sakuma/AP/File

(Read caption) A year and a half after he first tried to acquire Yahoo!, Microsoft CEO Steve Ballmer (pictured here in January) finally got a deal, which will boost his company's presence in the online-search market.

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The new Microsoft-Yahoo! deal is a win-lose agreement for the companies ... and, possibly, a costly distraction.

Yes, the deal announced early Wednesday allows Yahoo! to focus on its strength: selling online advertising. It also will give Microsoft's new Bing search engine nearly 30 percent of the online search market and a shot at competing with juggernaut Google.

But while Yahoo! consolidates and Microsoft plays catch up, what is Google doing? Working on the next generation of Android, its open-source operating system for smartphones.

If you were the business strategist for one of these companies, where would you see the most potential: search-related display ads or smartphones?


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