What Can Yahoo Gain by Listening to MSN’s Bid?

This week Yahoo Search! received an unsolicited offer from MSN to acquire the company. The $45 Billion bid created an instant media and blogging frenzy, creating intense speculation on whether or not the third largest search engine could gain search engine market share by buying out the competition.

According to ComScore’s US Search Engine Rankings, Google currently holds 58.4% of the search marketplace, Yahoo is at 22.4% and MSN has only 9.8% of the search shares. Even if MSN’s bid for Yahoo Search! is successful, they would only have a combined share of 32.2% of the search marketplace, still placing MSNahoo (MSN + Yahoo) significantly behind Google.

Microsoft has tried to buy out the competition before. However, if you compare the two search engines, Yahoo is by far doing better. MSN needs Yahoo more than Yahoo needs MSN. So what does Yahoo have to gain by entertaining a bid from MSN?

There are several benefits of creating this type of internet buzz, even if the bid doesn’t go through:

• The mere speculation of the sale is going to bring significant publicity to Yahoo, raising the company top of mind with searchers and perhaps taking a little bit more search shares away from Google.
• Rise in stock prices for Yahoo. As of this morning, Yahoo’s stock has risen $28.75, that’s a 50% increase per share.

In the end, it doesn’t matter if MSN buys out Yahoo, they’re still going to have a long way to go before they start beating out Google’s share of search. However, its the perception of the sale that’s going to bring big payoffs for these two struggling search engines.