This is kind of a big deal. Whatever you want to think about the future of the economy, the future of politics, and the future of society in general, the Internet and computers plays a major role in that future. And since the Internet is this gigantic sea of information that no one would have any idea how to find anything on (can you imagine if we had a phone book for the Internet? Or if you had to call someone or get their business card to know what their web address was?). Point being, finding things on the Internet is big business. There are entire online industries that revolve around Search Engine Optimization, Search Engine Marketing, and a slew of personalized/ optimized advertisements that show up while you are doing your searching. That all said, it’s a battleground.

And Google is the undisputed winner. Google has pulled a Kleenex or a Xerox and become a verb. Even though the company expressly forbids other companies it works with from doing it, you and I can use “Google” as a verb. I google things. Things are googled.

And then there is Yahoo, also an important search engine and online destination and provider, but far behind Google for now. And then there is Microsoft, somehow a powerhouse in the hardware world but no real foothold in the search engine world. Even their recent Bing Search Engine hasn’t made a significant dent in what Google is doing.

But as of this week, Microsoft and Yahoo signed a 10 year web search deal, basically to team up and try to make some progress against Google. What they did not team up on is the display ad side of their business.

So what happened? Google stock fell 1% (which means they must be like two hundred and forty-two dollars apiece or something now). Yahoo stock fell 7.5% (as the perpetually unhappy Yahoo stock holders were again disappointed with how Yahoo negotiated).

The big deal I think is that the Bing search engine algorithm will now be used on the Yahoo search engine site. Yahoo will sell ads for both companies. That sounds like a pretty good deal for Microsoft- all they have to do is reappropriate technology they already built while Yahoo has to sell everyone on the concept that it is good enough and high traffic enough that they want to advertize on it.

According to Yahoo estimates, the deal will raise their income by $500 million / year. Better hope so, guys.

I think the other notable news is that Yahoo is saying that it will focus on its website portfolio and expand into mobile advertising…

Mobile (and thus mobile advertising) is being touted as the next big thing after social media- with 88% of Americans having some kind of cellular subscription, the market is huge and still growing. And the apps and the this and the that- a lot of people access the Internet through their phone, not their computer.

Now this is a politically savvy move if I have every seen one- sign on with Microsoft who has too much money to fail, use their technology to make your product better, then use all the time you saved to get your people to build good stuff for the next generation of advertising in the mobile sector.

Yahoo!!!