Why Facebook and Yahoo! Need to Start Talking
For a time on Sunday, the tech world went nuts over the prospect of Facebook (NAS: FB) and Yahoo! (NAS: YHOO) working on a search deal. London's The Sunday Telegraph newspaper reported that Sheryl Sandberg and Marissa Mayer had met to talk details.
By Monday, Kara Swisher of AllThingsD had doused any remaining enthusiasm for the rumor with a story that quoted anonymous sources who "scoffed" at the idea of a search deal. Facebook followed Swisher's report with a formal denial of its own.
"People expect a better search experience on Facebook. We are working on improvements to better meet those expectations but are not in talks to enter into a new search partnership," a spokesperson told Dan Farber at CNET News.
Fine. But let's at least admit why the Telegraph story got as much play as it did: At heart, most of us believe that Facebook and Yahoo! are going to be working together more closely in the future. They've no choice but to team up against their common rival, Google (NAS: GOOG) .
There are several ways the companies could partner:
- On mobile. Yahoo! has a longer and more successful history developing mobile software than does Facebook, whose app is only now gaining traction. Why not allow users of successful Yahoo! apps -- think Finance, Fantasy Football, and the like -- to log in using Facebook Connect? The resulting data sharing might result in better ad targeting for each. Meanwhile, Google says more than half the 150 million who regularly visit Google+ log in via mobile.
- On browsing. Facebook doesn't have its own browser, but it does have ambitions to create an ecosystem whereby users navigate back for discussion, news, and entertainment. An ecosystem, in other words. Imagine if you had a Facebook navbar in Yahoo!'s Axis browser that offered quick access to friends, apps, and pages. Make it exclusively available on Axis, and you've suddenly got a reason for users to set aside Chrome for part of their day.
- And yes, on search. Advertising is a data game. On the Web, no data is more useful for understanding desire than search and browsing history. Yahoo! has Bing via its partnership with Microsoft (NAS: MSFT) , while Facebook has Exchange, a technology that uses browsing history to improve ad targeting. Lately, we've seen signs that Yahoo! wants more than Mr. Softy is willing to give.
What do you think? Will Sandberg and Mayer get together and talk about a deal soon? Or should we be thankful that, at least so far, these two have left well enough alone? Weigh in using the comments box below.
It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.
The article Why Facebook and Yahoo! Need to Start Talking originally appeared on Fool.com.Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Google at the time of publication. Check out Tim's web home, portfolio holdings and Foolish writings, or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.
The Motley Fool owns shares of Google and Facebook. The Fool has bought calls on Facebook. Motley Fool newsletter services have recommended buying shares of Google and Facebook. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.