Steve Ballmer has described the approved partnership between Microsoft and Yahoo as a “milestone”, while Carol Bartz claims it to be a “breakthrough”. But why is this ‘alliance’ so significant?

The decision has been resting on the shoulders of the US Department of Justice and the European Commission for the past seven months. Japan, Korea and Taiwan are still yet to approve what will surely be a threat to Google’s ten year reign over the search market.  

Google, which has a 85.78% share of the global search market, has sat on its throne quite comfortably this past decade as every competitor that has entered the market has still failed to even make a dent in Google’s audience. However, with a combined market share of almost 10%, Yahoo and Bing are proving serious in their bid for leadership of the search world.

Both CEO’s Bartz and Ballmer suggest the ‘alliance’ is a bid to boost innovation. More simply, it’s about creating more competition and boosting revenues.

The global search market is estimated to be worth around $33 billion. In the US alone it is said to be $4 billion and in the UK, marketers spent £1.75 billion in 2009 alone.  

Yahoo is hoping to see some of that spend on its bottom line next year – it will be taking 88% of all search revenue generated from its partnership with Microsoft.

The question on everyone lips now is just how long will it take the pair to increase their share.

The deal will not be implemented straight away. In fact, it will take almost until the end of this year to know whether or not the alliance has been a success.

One thing we can be sure of though, is that it will certainly force Google to rethink its strategy (namely its Adwords platform which has in the past gathered criticism) and also keep it on its toes to innovate and offer bespoke offerings (not like Buzz!).

Poor Google. If you come in at the top there is only one place to go.

But Warren Cowan, CEO of Greenlight, writing for UTalkMarketing.com, is not convinced that Google’s grip on the search market will be strained.

He says that the idea that a Yahoo/Bing merger will create a search player with close to 30% market share (as quoted in AdAge) might be accurate for the US, but not in the UK – or western Europe for that matter.

Google is simply too big. But then again, isn’t what they said about all those banks that went bust (too big to fail)?

The big challenge now, however, is tempting away loyal Google users who have, for the past ten years, used little else when it comes to search.