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The Yahoo/Microsoft partnership, while the Silicon Valley talk, has employees concerned at Yahoo about more layoffs in the Yahoo search department. The deal teams of two of the biggest technology companies against Google for the lucrative control of the internet search market. Analyst believe that, in the short term, Google would has little to worry about but in the long term they may depending on how advertisers respond to the idea of a larger #2 in the search advertising market.

Google, currently, has 65% of the market while Yahoo has almost 20% and Microsoft at a distant third with less than 10%. The managing editor for CRN Magazine considers this absolute steal for Microsoft in that Yahoo wins the ability to stay an independent company with a huge new friend. Reporters say consumers won’t notice changes right away but the partnership will benefit consumers over the long run because it doesn’t hurt to have a very strong #2 in search. With consumers receptive to the move, analysts believe that it will boost Bing’s exposure to Yahoo’s audience giving Microsoft its desire for a greater share of Internet advertising. Yahoo is reserving the right to retain control of the user interface which will control the look and feel of how the search results will be presented but the technology is all done by Microsoft. Analysts predict a tie in to remind people that Bing is what’s providing the results which is key to branding for Microsoft.

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  1. What kind of competitive advantage is created through the Microsoft/Yahoo cooperative strategy? Explain.
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  2. What kind of strategic alliance has occurred with Microsoft and Yahoo? Explain your answer. For what reasons do you think they developed such an alliance?
  3. Now that Microsoft and Yahoo have partnered, what business-level cooperative strategies do you think we can expect from them? Why? Explain.
  4. What corporate-level cooperative strategies do you think we can expect? Why? Explain.

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