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There were quite a few posts  the last couple of days about the Google Yahoo deal. The powers against the deal (a.k.a Microsoft) organized many advertisers to talk loudly about their fear that such a deal will bring with it price fixing from Google side.

But as Danny Sullivan from Ad Age and Marshal Sponder wrote, Google is already fixing prices from day one.
Google has two very big black boxes under its belt.
The first one is the quality score algorithm that determines which ad will appear for each search and also how much the advertiser will pay for it.
Although they give some general guidelines about how this quality score is calculated, Google never really told the world how it is really done.
The second black box is the revenue share Google gives the publisher. As a publisher you have no idea how much of the advertising money is going to your pocket and how much into Google. There is a big chance that even if Google will change this number, you will never really know.
This fact combined with the huge number of publishers and advertisers using their services, gives Google great flexibility in its operations. When times are bad, they can always just add 0.01 cents to their part of the rev share and keep show wall street the growth they need.

With that in mind, you can start to understand why if the deal with Yahoo will take place, Google will have full control over the future of Yahoo. With small tweeks they can control exactly how much money Yahoo will make, how much ads they should give them, and how much money will advertisers will have to pay for these ads.

So is this deal really that bad for the advertisers, the publishers and the market? Maybe… And maybe not. It’s all in the hands of Google two black boxes.

Today big news were of course the expected deal between Yahoo and Google.
Yahoo will outsource some (we can guess most) of their search advertising and in site contextual advertising to Google.
This makes Google basically almost unbeatable in search. It’s no longer a technology question of coming up with better algorithm to do contextual advertising. It’s all about the ROI they can give publishers and advertisers. And this is first of all a size question. When you have such a huge amount of advertisers and inventory, you can play the numbers in a way that will maximize the results better than anyone else. Microsoft and the other players simply don’t have a chance.
So there are two big questions that come up to mind:
Is this deal good for advertisers? Still hard to know. In the short run, it definitely makes their lives better. Bid for words on Google and reach also the rich Yahoo traffic. On the long run? When Google own interests is to make prices go up as they take a cut of the sale, it’s always bed to have simply just one player. So for the long run, we have to sit and wait and see how this will play out.
The second important questions is of course - So how can someone beat Google?
It seems that there are now just two ways to beat Google:

1. Create such a better search engine, that you will be able to basically convert Google users. This scenario is very unlikely to happen. The main reason is that it is not a technology question but a psychology one. The Google name is “burned” into people mind so hard that even if you’ll proof to them that your engine can bring better search results, most people will still use Google just out of the fear that they are losing something.

2. Hit Google where it really hurts - the revenue share with their publishers. Google takes approx 30% of advertising money and give the other 70% to the publisher. A year ago there was some discussion in the blogosphere about an open source search platform. A platform that takes on the power of open source to beat Google page rank algorithm and at the same time gives publishers 100% of the advertising deal.
Such a platform can be 29% worse than Google, and still convince a publisher to give it his inventory.
Of course this is all theory. In reality there are many problems in creating sucha platform. From who going to fund the massive datawherhouse needed for this, to how you make sure SEO black hats doesn’t game the sysetm when it is an open source one.