All of this signals a new 'search engine war' in an increasingly lucrative segment of cyberspace.
"Everybody had thought of Yahoo as the web, and they kind of lost a bit of that," said Brett Tabke, founder of WebmasterWorld.com, a news and discussion forum for Internet professionals.
Google is the direct website used for searching by 39 percent of US Internet users, compared with 30 percent for Yahoo, according to Nielsen/Netratings. Yet because Google is an underlying engine for Yahoo, AOL and others, it powers some 79 percent of all searches, according to Searchenginewatch.com.
Netratings analyst Jason Levin said Google's no-frills design does not detract from its search power.
"People want results quickly and accurately," he said. "Cool design and popular content is not important to the general public" for search engines.
Yahoo, which will gradually roll out its own search engine, said its technology will soon power about half of all online searches in the US. The new Yahoo technology "will deliver against our mission of providing the highest quality search experience on the Web," said Yahoo senior vice president Jeff Weiner.
Tabke said Yahoo's new search engine "is very close to Google ... most people would have trouble making a distinction between the two." He added that Yahoo's move to break off with Google "means good things for Yahoo; they look like a complete package player now."
But he added that the move is good for Google as well, which can broaden its position as a Web "portal" with e-mail and other services.
Still, the two Silicon Valley firms, only a few kilometers apart from each other, will be fierce competitors in what is becoming a lucrative field of Internet search. What has made Internet search more profitable in recent years is the advent of "paid" or "sponsored" results that take the place of advertising.
For example, a user entering a search for consultants or fishing gear might get, in addition to search engine results, paid listings that appear on the same page, usually marked as separate.
According to the research firm eMarketer, US paid search advertising spending jumped 123 percent last year to $2-billion, and is likely to grow another 500 million this year and next. This has largely supplanted banner advertising a means to get direct responses from customers.
"Advertisers find that (paid search) is quite effective," said David Hallerman, senior analyst at eMarketer. "The main thing people are looking for is relevant results, and it doesn't matter if its advertising or not."
Moreover, Google, Yahoo and other search engines are increasingly used for shopping searches, enabling them to get a slice of sales of products and services.
Microsoft's next move?
A big question mark now is if and when Microsoft — which now uses Yahoo's Inktomi search engine — will roll out its own search technology. Analysts say Google is also looking over its shoulder at Microsoft, but Halloran said it would not immediately dominate the market.
"They will be a major player because they're Microsoft, but they don't win all ballgames," he said.
Jonathan Rosenberg, vice president of Google products, said Yahoo would remain a partner in some areas and that Google would uphold its contractual obligations to its rival. He added that he did not see a major impact on his firm from Yahoo's decision.
"This is a very big product space," he said. "If you look at Google's mission, it is to give people access to the world's knowledge. That's an awfully large space. There is certainly room for more than one search company and room for more than one way to search."
Rosenberg declined to comment on Google's future plans, but said the firm would focus on its own search technology. "I think the brand really stands for the best, most unbiased search experience available," he said.
Although paid listings are a key revenue source, Rosenberg said Google takes pains to keep the paid an unpaid listings separate. "We take that very seriously we always separate search results and advertising and always clearly and honestly label the ads as ads, unlike some of the competition. You can't buy your way up the Google search index."
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