Microsoft said Wednesday that it did not need to buy Yahoo to gain scale in online advertising, because it had “all the pieces” to build a successful ad business.
Still, some analysts said Microsoft needed an established Internet player like Yahoo to gain scale to take on Google. Several newspapers reported this month that Microsoft was considering a deal to acquire Yahoo for $40 billion to $50 billion, Reuters reports.
Microsoft and Sunnyvale, California-based Yahoo have struggled to dent Google's dominance in online searches and in the booming market for advertising spots next to search results. Combining with Yahoo would triple Microsoft's share of the U.S. search market to 38.4 percent, rivaling Google's 48.3 percent, according to ComScore Inc, Bloomberg reports.
The acquisition of AQuantive, owner of the largest online ad agency, is a "game changer" for us as sales of Internet advertising rise, Mehdi said.
Online ad sales rose 35 percent to $16.9 billion in the U.S. last year, the Interactive Advertising Bureau said today, citing a survey conducted with the accounting firm PricewaterhouseCoopers LLP. Fourth-quarter Internet ad spending reached a record $4.8 billion, a 33 percent gain. The Web accounted for 5.9 percent of all U.S. ad spending, up from 4.7 percent in 2005, the bureau said.
Microsoft is readying new features for its service that will give Mountain View, California-based Google “a run for their money,” Mehdi said.
Prepared by Alexander Timoshik
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