Yesterday, AOL’s Huffington Post Media Group got into hot water after the top editor at its Moviefone unit sent a memo to freelancers it was in the midst of firing, offering them an opportunity to “contribute as part of our non-paid blogger system.”

Today, that exec–Moviefone Editor-in-Chief Patricia Chui–was fired by the company, which is in the midst of drastically rejiggering its stable of writers.

Many of those were freelance bloggers under contract to AOL, who are now getting the boot in favor of reallocating staff back to largely paid journalists.

Thus came the controversial email from Chui, which read, in part:

“We will, indeed, be moving away from a freelancer model and toward one relying on full-time staffers. Sometime soon-–this week, I believe–-many of you will be receiving an email informing you that your services as a freelancer will no longer be required. You will be invited to contribute as part of our non-paid blogger system; and though I know that for many of you this will not be an option financially, I strongly encourage you to consider it if you/d like to keep writing for us, because we value all of your voices and input.”

Oh dear. Really, oh dear, especially since the Huffington Post has had its own share of controversies over not paying some bloggers (although it never quite ever offered up a doozie that this letter was).

Sources said Chui was terminated by John Montorio, the HuffPo Media Group’s culture, entertainment and lifestyle editor. Arianna Huffiington is head of all content at AOL, which recently paid $315 million to buy the Huffington Post.

Since she took over, Huffington has tried to stress a return to journalism over more algorithmic content creation. The unloading of its freelance writers was part of that effort.

Thus, Chui’s missteps did not help matters.

But it was not the first time recently that she had made an ill-advised editorial judgment.

Sources said the firing is also due to an incident several weeks ago, in which Chui appeared to defend a marketing employee who sent an email to TechCrunch writer Alexia Tsotsis, asking her to soften a review of “Source Code” due to studio relationship considerations.

AOL bought TechCrunch, a well-known tech news site, last fall. At the time, its CEO Tim Armstrong promised editorial independence and no meddling over advertising concerns.

Instead of taking this minion to task, on Moviefone’s own blog Chui said, in part:

“The reality of our situation is that, as a movies site, we work with movie studios every day, and it is in our best interests to stay on good terms with them. Staying on good terms with studios means that we will relay information if asked. It does not mean that we would ever force a writer or an editor to edit their work for the sake of a studio–or anyone else.”

Even with the last line, it is not exactly a profile in courage, because it was clear violation of the traditional separation of church and state in force at most media organizations.

Typically, editors are supposed to come down on any such communication. That has certainly been my experience in journalism over the years at the Washington Post and Dow Jones–including during its News Corp. ownership. In fact, I have often been shielded from such requests to pass such complaints onto me and only found out much later of advertiser discomfort about my reporting.

At the time, TechCrunch quite clearly called for Chui’s firing and that happened today.

Here is Chui’s full memo to freelancers, as well as the one about TechCrunch, neither of which were apparently cleared with higher-ups:

From: Chui, Patricia
Sent: Tuesday, April 05, 2011 11:26 AM
To: MoviefoneWriters
Subject: Moviefone/Cinematical–Status of Writers

Dear Moviefone/Cinematical Writers,

I know there’s been a lot of uncertainty regarding the future of freelancers and your status as a writer for the site. I personally apologize for the lack of communication, but I’ll tell you what I can.

We will, indeed, be moving away from a freelancer model and toward one relying on full-time staffers. Sometime soon–this week, I believe–many of you will be receiving an email informing you that your services as a freelancer will no longer be required. You will be invited to contribute as part of our non-paid blogger system; and though I know that for many of you this will not be an option financially, I strongly encourage you to consider it if you’d like to keep writing for us, because we value all of your voices and input.

Some of you have indicated interest in applying for full-time writer and editor positions, and the status of those positions are also part of discussions that are ongoing right now. I cannot at this point, however, tell you how many positions there are, or what the exact nature of those positions will be.

Despite the move toward a full-time staff vs. freelancer model, I’m told that there will be room for “exceptions”–for example, in the cases of writers who specialize in certain subjects. Again, what these exceptions are for Moviefone, and what the budget for them would be, is still being discussed.

As for Cinematical, the resignation of Erik Davis is certainly a loss. But I am continuing to have conversations with the editorial leadership here, and I am hopeful that we will still be able to maintain the Cinematical brand and voice going forward. Again, I will share with you any pertinent information as I have it.

In the meantime, those of you who already have assignments, please do continue to work on them unless you hear otherwise. If you’re uncertain of the status of your assignment, check with me. It may take me a while to get back to you, so please be patient–but I will respond.

I am sorry that I don’t have more specific details to give you, but I promise that I’ll keep you as well-informed as I possibly can. Don’t hesitate to reach out if you have questions or concerns.

Best,

patricia

By now you may have read the recent post in TechCrunch regarding that site’s SXSW coverage of the film “Source Code.” A representative from Moviefone, who set up the interview with Summit Entertainment, received some feedback from the studio and passed it along to TechCrunch (our sister site here at AOL). That email has now caused something of a Internet kerfuffle.

Here is the email–reprinted in the post–that was sent to the TechCrunch writer.

Hey Alexia,

Hope you’re having a good time at SxSW and that it’s not been too crazy busy for you!

First wanted to thank you for covering Source Code/attending the party, etc. But also wanted to raise a concern that Summit had about the piece that ran. They felt it was a little snarky and wondered if any of the snark can be toned down? I wasn’t able to view the video interviews but I think their issue is just with some of the text. Let me know if you’re able to take another look at it and make any edits. I know of course that TechCrunch has its own voice and editorial standards, so if you have good reasons not to change anything that’s fine, I just need to get back to Summit with some sort of information. Let me know.

Thanks!

TechCrunch’s issue with Moviefone is that by sending this email, we, in their words, “asked us to change our post. It’s not just sad, it’s wrong.”

I wanted to take this opportunity to clarify a few things.

1) The person who wrote that email was not acting in an editorial capacity. That person’s job is to act as an intermediary between the studios and editorial–not to dictate content, nor to weigh in on the content of Moviefone or any other AOL site. In fact, the presence of a person with that role is just one means we have of ensuring editorial integrity on Moviefone.

2) This is important: We never told TechCrunch to change the post in any way. A publicist at Summit reached out asking if we could convey the studio’s feedback to TechCrunch. We did so. If the editors had responded that they declined to edit the post–which, naturally, is entirely their call–we simply would have conveyed that information back to Summit.

The reality of our situation is that, as a movies site, we work with movie studios every day, and it is in our best interests to stay on good terms with them. Staying on good terms with studios means that we will relay information if asked. It does not mean that we would ever force a writer or an editor to edit their work for the sake of a studio–or anyone else.

We take editorial integrity seriously at Moviefone, and it’s painful to be depicted as a pawn of the studios when that is emphatically not the case. You may think it unseemly for a studio to request changes in an article; that’s certainly your right. But the accusation of pandering on our part or crossing an editorial line is, to my mind, completely unfair, and I would hope that a reasonable reader would be able to recognize the situation for what it is–overblown and unwarranted.

Patricia Chui
Editor-in-Chief, Moviefone

Demand Media is set to go public, according to an amended filing with the Securities and Exchange Commission, with shares priced from $14 to $16 each.

The online publisher could sell up to 8.625 million shares and, if it prices at the top of the range, it could be worth about $1.3 billion and raise $138 million.

That includes 4.5 million shares from the company, three million shares from existing shareholders and another 1.125 shares that its underwriters have an option to sell.

Demand will net $58.1 million, if the IPO price is $15.00 per share, which it said it will use for “investments in content, international expansion, working capital, product development, sales and marketing activities, general and administrative matters and capital expenditures.”

The company added that “we currently anticipate that our aggregate investments in content during the year ending December 31, 2011 will range from $50 million to $75 million.”

Demand’s ticker symbol will be DMD on the New York Stock Exchange.

In its amended prospectus, Demand said:

This is an initial public offering of shares of common stock of Demand Media, Inc.

Demand Media is offering 4,500,000 of the shares to be sold in the offering. The selling stockholders identified in this prospectus are offering an additional 3,000,000 shares. Demand Media will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders.

Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $14.00 and $16.00.

The common stock of Demand Media has been approved for listing on the New York Stock Exchange under the symbol “DMD.”

Demand’s road to an IPO has been relatively quick.

One bump came last month, as BoomTown reported after the Santa Monica, Calif. company had to satisfy government regulatory questions over the way it recognizes costs of creating content.

Currently, using a concept of “long-lived” content, Demand has been amortizing those expenses over five years, since it says it continues to generate revenue on that material over that much time. Most publisher recognize costs immediately.

That’s different from many companies in the publishing business, which typically account for costs of creating content immediately as they are incurred or over a much shorter time period.

Demand has determined that its content has a more evergreen nature, compared to more topical–and perishable, from a revenue point of view–material produced by others.

Obviously, since this accounting treatment results in more attractive financial results, the longer expense period is of great interest to many other online content creators–such as AOL and Yahoo–which are watching the Demand IPO closely.

While the SEC did not ask Demand to make changes to its accounting practices, the amended S-1 is more detailed about them.

To be allowed to expense over five years, Demand said, the company has to use a sophisticated algorithmic platform–which other content creators do not have–to provide proof of “probable economic benefits” from that content over that time.

Since Demand has long claimed that it has a new and innovative approach to content creation, it is making the case to investors that it needs to have the correct accounting for that approach.

Said Demand in its amended filing:

“In determining whether content embodies probable future economic benefit required for asset capitalization, management has reviewed, and intends to regularly review the operating performance of content published.”

But, it warned:

“Changes from the five year useful life we currently use to amortize our capitalized content would have a significant impact on our financial statements. For example, if underlying assumptions were to change such that our estimate of the weighted average useful life of our media content was higher by one year from January 1, 2010, our net loss would decrease by approximately $1.6 million for the nine months ended September 30, 2010, and would increase by approximately $2.4 million should the weighted average useful life be reduced by one year.”

The practice has passed government scrutiny and now investors will decide what they think of this and the entire business of Demand.

Demand execs will now go on a road show for the offering, which is being led by Goldman Sachs and Morgan Stanley.

Ask will now concentrate its efforts on a recently launched Q&A search tool with the team at its Oakland, Calif., office.

Ask has long been the fourth-place player in search, despite some innovative spurts like its origin as a natural-language search engine using the fictional butler Jeeves, and its early efforts to visually parse search results and media into snippets–now features of all major search engines.

IAC CEO Barry Diller, who has recently publicly disparaged Ask, told Bloomberg today, “We’ve realized in the last few years you can’t compete head on with Google.”

Ask launched a new Q&A approach in July, following a recent trend but also playing back to its roots. Sixty percent of questions on the service are now answered, up from 30 percent, Ask.com president Doug Leeds told SearchEngineLand today.

So, is Q&A and social search the way to compete with Google? It could be. Despite buying Aardvark and launching some minimal social search features, Google hasn’t done much in the area. There’s a lot of value in getting your network of friends to give recommendations, as many people do on Facebook and Twitter, and building communities to add knowledge to the Web rather than just crawl it, like on the small but promising Quora. These more recent innovations follow the surprising strength, in a Googlefied world, of products like Yahoo Answers and Korea’s Naver.

IAC hopping out of algorithmic search and crawling doesn’t change much in the market, but it does reaffirm Microsoft’s Bing as the other major player investing in search after Google. Elsewhere, I don’t even want to try to parse the Yahoo-Microsoft partnership. Facebook processes a ton of search queries already, despite a very basic offering, and also is working with Microsoft on search. And Twitter has seen serious growth in search–it says it gets a billion queries a day–but the company seems to count just about every time someone pings its service as a search.

In fact, a lot of the real workers have been toiling away, and one new big result is that Microsoft’s adCenter is now officially powering 100 percent of paid search on the Silicon Valley Internet giant’s owned-and-operated properties and its publisher network in the U.S. and Canada.

According to the companies, that means marketers can now use one account for their search advertising campaigns across both the Microsoft Bing service and Yahoo.

Yahoo and Microsoft–which are attempting to combine their share of the search marketplace to better compete with behemoth Google via a partnership–have already completed algorithmic search integration.

In the U.S., that’s 163 million searchers on Yahoo and Microsoft, as well as 15 million searchers in Canada.

Thus, the pair are as tight as ticks–kind of like the JWoww and Snooki of search!

Time for a fist pump, Yahoo CEO Carol Bartz and Microsoft CEO Steve Ballmer!

“We’re very proud of this latest achievement with the search alliance which signifies a seminal step in Yahoo!’s search history,” said Chi-Chao Chang, Yahoo’s VP and GM for the global search business, in a statement. “Now that the back end work is done, Yahoo! will be able to focus on achieving the long-term goals of the alliance that will benefit consumers, advertisers and publishers alike.”

Here we go with the Yahoo third-quarter earnings call starring CEO Carol Bartz, who has some–in the immortal words of Ricky Ricardo–‘splaining to do.

Yahoo turned in a much-needed solid quarterly earnings report, with slightly better-than-expected earnings, although still weak revenue.

Of course, there are all the takeover rumors, the exec departures and fights with partners such as China’s Alibaba Group.

2 pm PT: First on is the lovely investor relations lady, Marta, saying stuff I never pay attention to.

But Bartz came on right away and she sounded subdued and very much on script.

Good idea!

She began by explaining what she has been up to and–once again with feeling–exactly what Yahoo is.

“The key words are innovative, content, media and communications,” she stressed.

Technology is all well and good, but Yahoo is the “largest digital media, content and communications company.”

She also briefly addressed the departure of execs: “Some people leave, some get promoted and some good people arrive.”

Well, you could put such turmoil that matter-of-factly, I suppose.

Bartz then asked the question: “What have we done to re-engineer Yahoo?”

She reeled off a list she has repeated many times before, the point of which was to let us all know she has been mighty busy cleaning up the big mess she had to deal with on arrival.

So lay off, all you naysayers! It’s kind of like what President Barack Obama is saying these days, as he looks forward to huge political losses in the upcoming election.

It’s apparently a disciplined approach. “First you walk, then you run.” Then, she added, you FLY!

Don’t look down, Carol!

She promised to talk about what’s on all our minds–as in the takeover swirl related to AOL, News Corp. and a passel of private equity moneybags circling Yahoo.

2:15 pm: Time for the numbers from CFO Tim Morse, which you can see here.

He was much jauntier than usual. I wonder if that was in the script. Smile with your voice, Tim!

I mostly did not listen to this spiel, as it was a recount of the numbers I already read. But there are some nuggets.

Apparently, for example, revenue for owned and operated search is down because users are clicking on the really good new results from the Microsoft algorithmic search transition, so they are not clicking on paid search as much.

Hmmm….I wonder what happens when they get great.

Then it was on to earnings and stock repurchases, designed to goose the shares, which Yahoo considers undervalued.

So do investors.

Next, he moved on to the outlook, which was weak.

And Morse also noted the uncertainty that has to do with the search and online advertising alliance transition. “Caution is warranted,” said Morse.

“We’re pleased with our third-quarter results,” summarized Morse, seemingly ignoring the revenue issue.

2:31 pm: Bartz was then back on discussing the search alliance and the rocky relationship with China’s Alibaba Group. Rocky is my word and actually is also Alibaba’s.

At least all is well with Microsoft, Yahoo’s one-time nemesis.

It has been a big transition, of course, Bartz noted. Indeed.

Then Bartz went out of her way in praising Alibaba CEO Jack Ma, whom many sources said she has treated shabbily in the past.

It is “a good productive business relationship,” said Bartz.

Other than that, she politely suggested we all butt out of what Yahoo is going to do with the asset, a 29 percent stake of Alibaba.com worth $3.1 billion, according to the company.

Finally, Bartz said Yahoo had “potential” and promised a payoff to shareholders in the months ahead.

That would be nice.

2:38 pm: Time for Q&A.

The first question was about the search revenue growth. Soon!

The next was about search revenue and display advertising and a left-field query on engagement on smartphones.

Same answer, and also people will use Yahoo on any screen.

Next question was on display growth. Same answer.

Will any of these analysts ask the good questions about takeover rumors and other thorny management issues?

Wait, finally there came a sheepish request for clarification about the rumors–well, they are real, so realmors–about takeover plans by private equity folks, along with AOL’s Tim Armstrong.

“As tempting as it is to tell you what I really think, you know I can’t comment,” said Bartz, who really sounded like she wanted to comment.

Give in, Carol! In the words of Oscar Wilde, which is BoomTown’s operating motto: “I can resist everything except temptation.”

Nope, she will not utter a word about “hypothetical this and hypothetical that.”

Instead, the boilerplate: “We like our strategy, we like our progress, and that’s what we’re focused on.”

Next, more questions about revenue weakness. Bartz blamed it all on the drag of search revenue. “The main drag on our growth has been search revenue,” she noted.

She said it will get better once the whole transition kicks in.

Bartz did sound convincing, especially when she noted it was part of a six-year trend in decline in search. By the end of 2011, she promised, it will all be different.

But, in the immortal words of Clint Eastwood in “Dirty Harry”: “You’ve got to ask yourself one question: Do I feel lucky? Well, do ya, punk?”

Now, a question about a “bloated” work force. Yahoo employee count is up seven percent, although costs are down 12 percent.

Morse: “No, we’re not bloated.”

Bartz took a question about competition in the display market, as in Yahoo is going to get smacked by rivals, such as Google.

“There is always competition and competition only makes us better,” said Bartz. “We’re running very fast and not going to give up this leadership in display very easily.”

Given Google’s inroads here, she better run faster than the Road Runner.

The last question was about monetization of mobile.

Lots of pretty, empty words from Bartz, especially since Yahoo does not have a really competitive offering compared to Google and Apple.

It should be added that both Google and Apple smoked it in terms of revenue growth in their quarterly earnings this week.

Also, I hear that Facebook social networking site is growing pretty quickly.

And it ended, with nary a decent question from Wall Street analysts about the clear turmoil at the long-troubled Silicon Valley icon and answers about what Bartz is going to do to address it.

The media is in listen-only mode for these calls, which is a shame, since I for one would love to listen to what Bartz has to say.

I know you’re busy and all, Carol, but perhaps you can talk over dinner soon?

The new features include an innovative, if odd, vertical “accordion” tab.

“We have been actively working on the algorithmic transition of search, which was completed in August, and we are already releasing new features to the search experience,” said Shashi Seth, SVP of Yahoo Search and Marketplaces, in an interview with BoomTown today. “Since we are not actively spending a lot of energy on back-end stuff, we can focus our efforts on new things.”

Among the new enhancements to Yahoo (YHOO) search: A vertical “accordion” paradigm with shortcuts on search results that allow for new kinds of information presentation; “quick apps,” beginning with one for Netflix (NFLX) that lets its members add movies to their queue directly from the search results page; slideshows within search from the “Trending Now” lists on Yahoo; more immersive and theater-style photo and video search, as well as “the ability for people to view personally meaningful public Facebook albums from friends,” when they sign in to Facebook; and a new mobile search experience for Apple (AAPL) iPhone and Google Android smartphones, as well as feature phones, that uses HTML5 technology.

“We wanted users to see that things had changed dramatically,” said Seth. “Consumer needs for search engines have changed.”

He said that in testing so far, engagement–an increasingly important measure for advertisers–had spiked with the new features, especially in “taking search from an information need to action at an end.”

Seth promised a “huge pipeline of stuff” to come in search, where the Silicon Valley Internet giant holds the No. 2 position in market share, well behind Google (GOOG) and ahead of the Microsoft (MSFT) Bing service.

Both Google and Microsoft have been adding a series of search upgrades over the last year, such as Google Instant, while Yahoo has not.

Yahoo has a blog post up about it here.

And here are some screenshots, as well as the official press release and an overview by Yahoo of the new search features (click on the images to make them bigger):

Yahoo! Makes Searching More Relevant, Productive and Fun

New features help people explore their interests and do more

SUNNYVALE, Calif., October 7, 2010–Yahoo! (NASDAQ: YHOO) today introduced new Search enhancements that will help millions of people be entertained, productive, and informed anywhere they are across Yahoo!. Leveraging Yahoo!’s rich content and robust technology platforms, these new Yahoo! Search features will help people get to the entertainment and news content they care about on all connected devices–and do more with the things they find.

“Our goal is to understand what people care about and to make it fun for them to explore the most personally relevant, interesting, and informative content so that they can get things done faster and stay in the know,” said Shashi Seth, senior vice president, Yahoo! Search and Marketplaces. “Yahoo!’s new immersive Search is a cornerstone of the overall Yahoo! experience, creating more ways to connect people with whatever and whoever interests them.”

To start using the new enhancements, go to Yahoo.com and search for topics such as “Lady Gaga” or “Wall Street: Money Never Sleeps.” The features include 3D multifaceted results and tools that let people:

• Cut to the chase–Intelligent shortcuts for movies, musical artists, celebrities and news topics conveniently organize the most important details such as images, articles, videos, tweets, event listings, and ratings. They also provide quick and easy ways to purchase movie or concert tickets while searching.

• Find favorite flicks–The first in a series of unique “quick apps” from Yahoo! Search, a new Web app for Netflix provides an easy way for Netflix members to add movies to their Queue right from the Search results page. In the coming months, Yahoo! plans to launch additional apps that change the search paradigm from finding to doing.

• Watch what’s happening now–Continuing to bring Search to more people in more places across Yahoo!, the company is helping people feed their curiosity by displaying image slideshows right above the standard results for interesting topics from Yahoo!’s Trending Now lists on Yahoo.com and elsewhere.

• Lean back and browse more pictures–An immersive new Yahoo! Image Search delivers engaging slideshows with public photos from Flickr and Yahoo!’s leading content sites, as well as the ability for people to view personally meaningful public Facebook albums from friends when they sign-in and connect their Yahoo! accounts to Facebook.

• Search on the go–Android and iPhone users can now get faster, more sophisticated Search results, thanks to the latest HTML5 technology. Rich content on entertainment, finance, and local topics is surfaced in more unique and compelling ways for high-end mobile devices.

Working toward its vision to be the center of people’s online lives, Yahoo! is dedicated to re-imagining Search by creating new ways to bring people closer to what they need and want on the Web. Today’s visually stunning new Search experiences throughout the Yahoo! network, along with innovative technology enhancements and quality improvements for rich local and shopping searches, all supplement organic algorithmic Search listings from the recently transitioned Microsoft search platform. Yahoo! expects current and future innovations to redefine Yahoo! Search and drive greater consumer engagement and loyalty.

New features began rolling out to Search users across the U.S. today, and Yahoo! expects to launch them for additional global markets in 2011.

Search Launch Overview Oct 2010

We all want to be something else, don’t we?

And so it is with Google (GOOG), the robotic, algorithmic, black-box search behemoth girding the globe with datacenters stacked up to heaven.

As it turns out, all it really wants is to be our friend.

The big question is when it is going to do that, by introducing a social strategy that actually works, even as perceived rival Facebook barrels ahead.

Sources close to the company, as well as some voluble Silicon Valley players–such as Digg’s Kevin Rose and Quora’s Adam D’Angelo–insist that Google is zeroing in on a plan for a service internally called Google Me–get it?–that it will begin to unveil in the weeks ahead.

Wouldn’t it be nice if it did so today, when Google is holding yet another product feature-fest at its San Francisco offices, as it did recently about its cool Voice Actions mobile offering.

(Memo to Google PR: Digital Daily’s John Paczkowski will be liveblogging the event, but you can’t ask press not to talk about a public company event before it takes place–even if it is invite-only.)

That’s unlikely, but some answer in the social space couldn’t come soon enough, especially because all of Google’s various and sundry efforts have yielded little in the way of any gains and, well, have shown a lot of losses.

Yesterday, for example, it was reported by The Wall Street Journal that Google’s Orkut social networking service had lost primacy in India to Facebook.

Orkut, as is well known, has lagged worldwide, except for inexplicably rocking India and Brazil.

Now, even though Google has added more punch to Orkut of late, it is down to just Brazil.

And then there was Buzz, which Google launched in February to much fanfare, followed by much more confusion.

That’s because, by using Gmail as the central organizing principle for Buzz, it quickly degenerated into an “Animal Planet” episode called “When Email Attacks.”

As for Google’s overhyped-by-bloggers communications and collaboration app Wave, it soon became “Wave Buh-Bye.”

To be fair, it is admirable that a big company like Google, which made its bones from search, has rolled out so many attempts at innovation over the last two years in areas such as apps, cloud computing and especially mobile.

And, in those categories, it is doing well, even as its stabs at social media have fallen so far off the target.

Is it because Google is inherently as social as a digital version of a telephone book, or an encyclopedia or an almanac? Which is to say helpful, but not at all attracting of friendship.

Or, as with its early efforts to find its golden business model, has Google just not yet hit on the social equivalent of AdSense and AdWords?

Meanwhile, over at Facebook HQ in nearby in Silicon Valley, CEO Mark Zuckerberg has his team working all night on a multitude of feature launches, which he described to me at the recent rollout of the social networking powerhouse’s Places geo-location feature as fast and furious.

That’s probably the right tone, although if I were Facebook, I would take it down to Defcon 5 with regard to Google.

At least until Google Me is more than just a clever, rainbow-colored search term, that is.

Until then, let’s all enjoy this music video of the incomparable Lionel Richie singing the classic song “Say You, Say Me”:

Please see this disclosure related to me and Google.

Online games phenom Zynga and Japanese Internet and telecom giant SoftBank announced a joint venture to develop and distribute social games across Japan.

The new Tokyo-based service will be called Zynga Japan and is Zynga’s first foray into that country.

The companies also said SoftBank had completed a $150 million investment in Zynga, which had been previously reported.

It’s Zynga’s second major move into Asia. In May, the start-up acquired China-based social gaming developer XPD Media.

The San Francisco-based Zynga, of course, has been on a tear of late too, striking deals with Yahoo and Google, as it seeks to expand its distribution from Facebook, the social networking platform where it first took off.

Zynga also recently signed a five-year agreement with Facebook.

SoftBank made other digital news yesterday when it announced that it would switch Yahoo Japan’s algorithmic and paid search from Yahoo (YHOO) to Google (GOOG).

Here’s the official press release:

ZYNGA AND SOFTBANK CORP. LAUNCH JOINT VENTURE TO ACCELERATE SOCIAL GAME INDUSTRY IN ASIA

SOFTBANK INVESTS $150 MILLION IN ZYNGA

SAN FRANCISCO and TOKYO–July 29, 2010–Zynga and Softbank today announced a joint venture that will develop and distribute social games across Japan. The new joint venture, Zynga Japan, brings together leaders in social games and consumer technology to offer millions of new users the ability to play social games anytime and anywhere. In conjunction with today’s announcement, Softbank has completed a $150 million investment in Zynga. With this agreement, Zynga and Softbank will tighten their relationship as business partners.

The joint venture extends Zynga’s reach to a wider global audience and marks the company’s first foray into the rapidly growing internet and mobile market in Japan. Based in Tokyo, Zynga Japan will tap into Japan’s rich history of gaming and leverage Softbank’s cutting edge mobile and Web technology to produce the best social games in the market.

“Zynga is a leader in social games and I am delighted to partner with them to introduce their social games to Japan,” said Masayoshi Son, chairman and CEO of Softbank. “We share the same vision as Zynga in social games and look forward to working together to create a social game powerhouse.”

“We’re excited to partner with Softbank to bring Zynga’s social games to Japan and gain insights from the Japanese market,” said Mark Pincus, CEO and Founder of Zynga. “As one of the most innovative technology companies in the world, Softbank is bringing the mobile internet to consumers making the social web more accessible to people everywhere.”

If at first you don’t succeed, at least according to Google…try Japan.

In what amounts to an even more aggressive move than it made in trying–and failing due to regulatory objection–to strike a search partnership deal with Yahoo in the U.S. in 2008, Google and Yahoo Japan announced yesterday that the search giant will take over both the algorithmic and paid search businesses from, well, Yahoo.

If that sound confusing, it is because the Silicon Valley-based Yahoo owns only 35 percent of Yahoo Japan, which is an independent and separately traded company.

In fact, early Yahoo investor and Japanese telecommunications giant SoftBank Corp. has a larger stake and essentially controls Yahoo Japan.

Which is now free to leave Yahoo (YHOO) and to do a deal with Google (GOOG), it seems, after Yahoo struck a wide-ranging search technology and online deal of its own with Microsoft (MSFT) last year.

Under the terms of the deal, Yahoo outsourced its search technology to Microsoft’s Bing service.

Both Yahoo and Microsoft had hoped to keep Yahoo Japan in the fold, using Bing too, but it’s clear Google decided to get very competitive in a market where it has been the No. 2 player since it debuted its Japanese-language service in 2000.

Interestingly, Google was Yahoo Japan’s search technology provider for several years soon after it arrived, but that job then went to Yahoo.

In order to compete better with Yahoo Japan, which has a 53 percent market share compared to Google’s 38 percent, Google has tried a range of efforts unusual to its standard modus operandi

Those include PR stunts, brand advertising and even mucking up its pristine white main page with text and other noisy visual elements.

Because of that, Google has made market inroads, to be sure, cutting Yahoo Japan’s share slowly.

It’s an accomplishment that might have prompted Yahoo Japan to make a lucrative deal with the search giant, while the getting was good and before it lost more share.

As for Google, it stopped playing around and went for the actual business itself by effectively hip-checking Yahoo out of its spot.

And, at least in Japan, Google said regulators have already decided that its ambitious reach was not too much, even given the overwhelming share that will result with the Google-Yahoo Japan union.

Said a Google spokesman: “The companies have consulted with the Japan Fair Trade Commission, and confirmed that the JFTC has no objection to the proposed transaction.”

Incredible. And not in a good way.

That’s because a monopoly is a monopoly is a monopoly, no matter which language you say it in.

Even with apparent Japanese government approval, Microsoft is sure to try to scotch the deal, making hay with the fact that practically all the paid and algorithmic search in Japan would be under the control of one entity, especially so if it also includes mobile elements.

A lot is at stake for Microsoft, which is now in much bigger trouble in its quest to increase global market share for Bing.

That’s because Japan has close to 100 million active and wired consumers, many of whom are on the cutting edge of digital innovation. Japan is also a huge advertising market, second only to the U.S.

Given how important global growth is, it’s a market too juicy for growth-craving Google to pass up.

It is striking then that regulators will let the company enmesh its search service as deeply as it will with the Yahoo Japan move.

As with its scotched deal with Yahoo here–which Google abandoned after it was clear the U.S. government was not going to tolerate such market power in the hands of one player. At the time, Google said there would be plenty of competition, which it is now saying again.

In an email to me, Google PR dude Adam Kovacevich made the following salient points that I render here in their entirety:

It’s actually a different situation from the 2008 deal. To wit:

* Google will only be licensing its advertising platform services to YJC, and will not be providing its ads to appear on YJC. YJC will continue to manage their own advertising system and advertiser relationships, and both companies’ advertisers and advertising data will remain entirely separate.

* YJC will continue to compete as an independent online search and advertising company, and will be able to customize Google’s search service for their users–including how they see and experience search on YJC. Users should continue to expect to have very different experiences on YJC–whose portal approach to search is very popular in Japan–versus when they are on Google.

* This kind of arrangement is commonplace in the business world, and it doesn’t foreclose robust competition. Toyota sells its hybrid technology to Ford, even though they compete against one another in selling cars. Canon provides laser printer engines for HP, despite also competing in the broader laser printer market. And this is not the first time we’ve licensed our search technology to another portal site.

* The companies have consulted with the Japan Fair Trade Commission, and confirmed that the JFTC has no objection to the proposed transaction. We believe this is the correct outcome for a number of reasons, including the fact that the license will be non-exclusive, and both parties will be free to explore better products and services and work with third parties as they see fit. Competition between Google and YJC, as well as others in the online advertising market, will remain vigorous because their advertising operations will stay independent of one another, and there is competition with other online advertising service providers. In addition, from an advertiser perspective, online advertising is just one of many options available to them—including placing advertisements in traditional media.

Yes, the thriving newspaper business is a option! Wait a minute…

In any case, you might imagine the Japanese government would be a little more concerned.

It should be.

Regarding the Yahoogle attempt, as I also noted then:

“It is bad for advertisers, it is bad for consumers, it is bad for innovation, no matter how well-intentioned Google is.”

But Japanese regulators don’t have to take my word for it–they can listen to a 2008 quote by SoftBank head Masayoshi Son, who plays a critical role on the board of Yahoo Japan and presumably blessed this new deal:

“Google is a worthy competitor. The common threat is Google. I say that with respect.”

And, with respect, perhaps Japanese regulators need to take a little bit more time in waving any such deal on through so quickly and without public comment.

As BoomTown reported earlier today, Yahoo Japan confirmed it would switch its search technology and paid search provider to Google from Yahoo.

The move is a definite blow to Yahoo’s new search and advertising alliance with Microsoft (MSFT), although Yahoo (YHOO) sought to minimize the damage in a statement (which you can read below in its entirety).

But make no mistake, given the huge Japanese market: It’s Googzilla totally wiping the floor with MicroHooSoftra.

While it might seem unusual that Yahoo Japan will be using Google’s search, the company is not actually owned by Yahoo, which holds a 35 percent stake.

SoftBank Corp., the giant Japan-based Internet service provider and cell phone provider, has a stake of around 40 percent in Yahoo Japan.

Both SoftBank Founder Masayoshi Son–one of the first key investors in Yahoo–and Yahoo co-founder Jerry Yang sit on the board of Yahoo Japan, which is operated independently as a separate publicly traded company run by President and CEO Masahiro Inoue.

Now that Yahoo Japan and Google (GOOG) have announced their engagement–in a statement at the time of Yahoo Japan’s first-quarter earnings announcement–it is certain that Microsoft will move to stop deal from gaining regulatory approval in Japan, even though a Google spokesman told BoomTown it had already consulted the proper authorities in Japan and had gotten no objections.

Still, I would not expect Microsoft to settle for that, and it is likely to do some lobbying
much as it did successfully when Google tried to enter into a similar deal with Yahoo itself in the U.S. in 2008.

That deal failed after government opposition to the creation of a near-monopoly in search in the U.S. became clear.

In Japan the combination is even worse, with the pair controlling almost the entire market share of search there, both paid and algorithmic.

In search query volume, according to one recent report, Yahoo Japan currently has just over a 53 percent share of the search market and Google has just over 38 percent.

Other polls differ, but it all spells an overwhelming and definite monopoly when combined.

Coincidentally, Bing just entered the Japan market with its branded search, but it has only a small share there of almost three percent.

The same market share among the big players holds in paid search too, with Yahoo Japan and Google controlling almost the whole thing between them.

Maintaining a modicum of competition in Japan was Yahoo’s to lose. And lose it did.

After Yahoo and Microsoft struck their wide-ranging search and online advertising partnership last year, Yahoo Japan–which now uses Yahoo technology for algorithmic and paid search–was then free to pick whatever search service it wanted.

Most expected it to use Microsoft’s Bing technology, which will be powering Yahoo in the U.S. by the end of the year, as well as in many other countries where Yahoo operates.

But, because Yahoo Japan is its own entity, any such deal needed to be negotiated among the parties, putting Yahoo Japan in play, much as if it were AOL (AOL) or News Corp. (NWS) unit MySpace in the U.S.

Investors are sure to ask what Yahoo management was doing as the Google effort took shape.

Those efforts obviously paid off, despite a declaration by Yahoo Japan’s Inoue in an January interview with a Japanese news organization that he was not impressed with some other Google services, such as its Street View mapping service.

Thus, the fallout from this is likely to be tough on Yahoo and also its nascent search relationship with Microsoft.

Yahoo Japan said the date of the switch was yet to be determined.

Here’s the statement from Yahoo on the changeover:

Yahoo! Japan announced that it has chosen to implement Google as its backend algorithmic search engine and paid search infrastructure. Yahoo! Japan made this decision as an independent and separate publicly traded company, in which Yahoo! holds a 35% equity interest. We amended our agreement with Yahoo! Japan as a result of this decision, and we do not anticipate that this amendment will have a material financial impact on our revenues. We will provide support, as required by our agreement, for the search experience Yahoo! Japan has chosen for its business, and we will continue to partner closely with Yahoo! Japan in other areas including mail, messenger, mobile, our content properties and more.

This decision by Yahoo! Japan does not impact the global rollout and implementation of the Yahoo! search alliance with Microsoft, except in the Japanese market. We remain confident in our transition plans for the search alliance, are driving innovation in the user experience around search on the Yahoo! network, and continue to be committed to our alliance with Microsoft.

In what would be a stunning blow to the massive search alliance between Microsoft and Yahoo, Google is apparently zeroing in on a deal to grab the algorithmic search business for Yahoo Japan, said several sources.

The agreement between Yahoo Japan and the U.S. search giant could be announced as early as today in Japan, sources said, and could be part of a larger deal between the two companies around mobile or other products.

Financial terms of such a deal were unclear.

News of the deal could come when Yahoo Japan announces its financial results at 3:10 pm Japan time on July 27, which is 11:10 pm PT today.

If Google (GOOG) and Yahoo Japan join together, the pair will control almost the entire market share of search in the Japanese market. It is not clear whether or not paid search is part of this deal at this time.

But in search query volume, Yahoo Japan currently has just over a 53 percent share of the search market and Google has just over 38 percent.

It is a monopoly in comparison to Microsoft, which has almost a three percent share.

Yahoo Japan is not actually owned by Yahoo, which holds a 35 percent stake. SoftBank Corp. has a stake of around 40 percent.

Both SoftBank Founder Masayoshi Son–one of the first key investors in Yahoo–and Yahoo co-founder Jerry Yang sit on the board of Yahoo Japan, which is operated independently and run by President and CEO Masahiro Inoue.

When Yahoo (YHOO) and Microsoft (MSFT) struck their wide-ranging search and online advertising partnership last year, Yahoo Japan–which now uses Yahoo technology for algorithmic search–was free to pick whatever search service it wanted.

That meant it was not obligated to use Microsoft’s Bing technology, which will be powering Yahoo in the U.S. by the end of the year, as well as in many other countries where Yahoo operates.

But, because Yahoo Japan is its own entity, any such deal was to be negotiated among the parties, putting Yahoo Japan in play, much as if it were AOL (AOL) or News Corp. (NWS) unit MySpace in the U.S.

Both those companies signed search deals with Google–and both are also now up for renewal.

Coincidentally, Bing just entered the Japan market with its branded search, but it has only a small share there.

And, ironically, Yahoo Japan’s Inoue said in an interview in January with a Japanese news organization that he was not impressed with some other Google services, such as its Street View mapping service.

In any case, if Yahoo Japan and Google do buddy up, it’s clear that Microsoft will likely try to block the deal from gaining regulatory approval in Japan, much in the same way it did successfully when Google tried to enter into a deal with Yahoo in the U.S. in 2008.

That deal crashed and burned after government opposition became evident.

It will also be interesting to see which search technology the Alibaba Group, which owns Yahoo’s name in China and of which Yahoo itself owns 40 percent, will select or if it will do search on its own.

Like Yahoo Japan, Alibaba–which is using Yahoo’s search and email technology now–is also not obligated to switch to Bing when Yahoo does. Such a deal is also subject to negotiation.

That said, Google’s relations with China remain tense, which could play a role in any talks with Alibaba.

Emails and calls to spokespeople at Yahoo, Yahoo Japan and SoftBank seeking confirmation were not returned as yet. Microsoft declined to comment.

After months of trying, BoomTown was finally granted an audience with the two key execs who are now responsible for one of the diciest digital jobs going right now: Microsoft’s Greg Nelson and Yahoo’s Mark Morrissey.

The pair’s two-year task is to coordinate the massive search and online advertising partnership the companies struck last year, a job that is perhaps one of the more complex and critical to their businesses going forward.

The deal was finally approved by government regulators in February, and that started the clock for Nelson and Morrissey to get it cooking with gas.

Although it is not as if either Microsoft (MSFT) or Yahoo (YHOO) had a choice but to join together in order to make a dent in the dominant market position of Google (GOOG) in search, the companies are hoping their combined share of close to 30 percent will make a difference to both advertisers and consumers.

The integration will be ongoing, with hopes that the U.S. market will see a unified backend for search technology by the end of the year. Paid search will follow, as will the rest of the global markets.

As part of the shift, some staff from the Yahoo search technology group have either left, been laid off or have been moving over to Microsoft in the transition.

That has meant a Silicon Valley-to-Seattle area back and forth commute for Nelson and Morrissey, both longtime employees who have worked on a variety of other jobs at both companies, including heading MSN and major advertising platform initiatives, respectively.

But this effort is bigger than any of that, since it essentially is the search equivalent of herding cats–by creating a seamless search and online advertising product that works quickly and well across two major Web properties.

Thus, here is the first of two parts of an edited transcript of much of my hour-long interview with both, in which we talked about a range of issues from operations to culture to codependency.

Part Two of of the interview is posted here.

GREG NELSON: So, you want to hear how I got into this thing?

BOOMTOWN: Yeah…explain it to me.

GREG NELSON: So, you know me from the MSN days. And [Microsoft search head Qi Lu] said, “I like what you’re doing with your team, but I have this assignment. And I said, “Qi, I really respect what you’re trying to do. I don’t know if I’m the right guy for you, but go ahead and talk to everybody you want to talk to. And if you come back and ask me to do it, I’ll say yes.”

So, he went out and interviewed a bunch of people and then came back and said, I want you to do it. That was hard, because I loved my MSN team, and I loved what I was doing. But, you know, when Qi asks, you say yes.

BOOMTOWN: Had you been doing any search business?

GREG NELSON: Well, only through the MSN lens. I was a publisher in a way, because I had the responsibility to drive search volume through MSN as a publisher. So, I would work with our editorial staff in all these different markets to think about search experiences in the context of a portal or a media property, and how you turn search into content or how you drive premium content experiences that add value to search, whatever it might be.

So, I thought about it only from that point of view. The algorithmic part of search, like the way that you generate relevance in search, the way that you attach it to advertising in search, that’s sort of my…that’s what I get to learn out of this job, which is great.

MARK MORRISSEY: When he started, both of our executives got our top level teams together. We wanted to be really on the ground running by the time they got regulatory approval.

GREG NELSON: Just to give you a sense of what I walked into, there were hundreds…I don’t remember exactly how many, probably 200 people that had expressed interest in working on that Yahoo partnership by the time that I was asked to take it on. And they were people from all different parts of the company and division; not necessarily all at senior levels, but people that had said, “Wow, I think that’s really interesting, I’d like to come work on it.”

So, I went through a review of all those resumes and all that talent, and then also did additional sort of looking around and picking people one at a time to build what we thought we would be a great team.

BOOMTOWN: And how many people are working on it from Microsoft?

GREG NELSON: All up?

BOOMTOWN: Yes.

GREG NELSON: Thousands.

BOOMTOWN: No, of course, but…

GREG NELSON: Yeah, I mean, there’s about 25 on my team, 25, 30, something like that.

MARK MORRISSEY: But even after you got your team together, one of the things that we’ve continued to do is find some key talent at Yahoo that has moved over to also be part of the Microsoft team.

GREG NELSON: That’s been really key.

MARK MORRISSEY: Yeah. So, we want people that really understand the search business and have extensive experience at Yahoo and can really help bridge not only the cultural differences, but the technical differences and the way we’ve approached the market.

BOOMTOWN: You’ve done a lot of these.

MARK MORRISSEY: So, yeah, about five years ago, they brought me into the product portion of Panama….And then that’s probably the closest comparable effort in the industry, because we did have to move our 400,000, plus or minus, global advertisers over from the platform over to Panama.

When [Yahoo CEO Carol Bartz] came on board, she asked me to be part of a small team that worked directly with Microsoft from the very beginning to figure out what the right thing was for us to do at the company, and obviously then to do…figure out what the right aligned incentives and the right structure would be for a long term, 10-year, global agreement between the two companies.

So, I did that, and that was a big portion of my responsibility last year. And then similar to Greg, as soon as it became clear that we were going to get an agreement signed sort of in the October timeframe, maybe a little bit sooner than that, Carol sat me down. I had another position in the company, and she said, it’s the right thing for you to do, and she asked me to do it.

So, she asked me to take on this role, and I just have had a long term affinity for search and search advertising. I wanted to make sure with all the work that we did on Panama and all the investments we made in search that we really ended up with the right future. Search is critical to Yahoo’s future, and yet we’ve got to make sure that we do this transition in a way that really puts us forward of all of our different customers.

BOOMTOWN: When you say Yahoo’s future, how do you look at it in search?

MARK MORRISSEY: It’s a critical part of our business today, and a critical part of our consumer experience, and it always will be. What the market deserves is it really needs a true alternative to Google. And the best way for us to achieve that is to acknowledge things that we do well, and the things that Microsoft does well, and to leverage those things together, as opposed to us trying to do everything ourselves, particularly in the areas that we’re maybe not so good at.

So, between Microsoft’s experience and focus on delivering great global platforms with true scale, Yahoo’s strength in terms of working with advertisers and understanding of the market, I really believe that in the mechanics we set up from the very beginning of this that by leveraging both of our strengths, that we can really deliver a true competitor to Google.

Not only does our scale combine to really give them much better liquidity that is huge, right, getting up close to 30 percent in the U.S., big, but then the focus that we have really helps out.

[We're not going to be in] the search platform business, the crawling, the ranking and the indexing of the Web. There is a lot of search-related technology that we’re still going to do, because we believe that the search experience…where the market needs to go for search, it’s still a relatively young market, at least from my perspective. But the search experience really needs to evolve significantly.

So, rather than us with less resources than what Google or Microsoft have had in the past trying to do all the back-end platforms and do search experience, now we’re going to take our best talent and focus on search experience and the overall consumer experience.

And then some of our talent is moving over to Microsoft. There’s about 400 people in the products organization between the search technology and paid search that are moving between Yahoo and Microsoft.

BOOMTOWN: And how successful have you been recruiting those [to Microsoft]?

GREG NELSON: Oh, really. Yeah, very successful.

BOOMTOWN: And they’re staying down there [in Silicon Valley]?

GREG NELSON: Yeah, most of them are in India. Some of them are in Silicon Valley, and other places. We’ve had a super-high acceptance rate.

So, we’ve made that quite a big priority, including a lot of executive visits, and a lot of kind of, “Hey, welcome to Microsoft, we’re excited to have you.”

BOOMTOWN: So, then you brought up over about 400, is that right?

GREG NELSON: They come in waves actually, because Mark had talked about Panama, if you want, but they still have to continue to run Panama over a period of time, across all these different markets.

So, as they are closing down Panama in various places, then we’re bringing waves of employees over and training them on adCenter.

MARK MORRISSEY: And that was one of the things that really started to demonstrate and build a lot of confidence in the execution portion of the partnership. There’s two very competing objectives: Get the employees over as fast as you possibly can, because getting that talent into Microsoft not only puts more key talent on developing the things that we need to have done for the future of the platform, but also helps in just the transition itself.

And yet we don’t want to move the talent so quickly that we’re not able to continue to the platform all the way through.

So, we went through a very rigorous…I think it took about five or six weeks with the senior leadership at Microsoft on what employees can go in what locations with what skill sets to allow us to balance between the two, and I thought it went fantastic.

Employees are engaged; the Microsoft team did an excellent job of helping to explain their level of investment and give those employees…because employees, they want to beat Google, and knowing that they have a future at a company that is going to invest significantly to make that happen was a big deal.

BOOMTOWN: And, Greg, when you’re saying, when they move over, there’s not a flipped switch, I understand that, but what’s the time line at this point?

GREG NELSON: I think we’ve brought over 100 or so.

MARK MORRISSEY: A big chunk went last week.

BOOMTOWN: When does it switch over?

MARK MORRISSEY: Beginning of next year.

BOOMTOWN: The U.S. moves first and then…

GREG NELSON: Yeah. Well, U.S. and Canada, North America.

BOOMTOWN: Right, and then? Then the rest of the world?

GREG NELSON: You can kind of do it by size of market. So, Europe next.

MARK MORRISSEY: Basically, there’s 59 total countries and the objective is to get all countries done by Q2 of 2012, the first few markets being U.S. and Canada.

GREG NELSON: It’s 24 months after commencement, which is February 18th.

BOOMTOWN: Right, but it begins next January, correct?

MARK MORRISSEY: The principle is to transition with quality. That’s the overriding factor. And that’s based on the consumer experience and the yield and performance of advertisers and publishers in our owned-and-operated properties, right, because the intent here is make sure that, as we make the transition to going forward, we want the business results to get nothing but better and better.

We set a goal for both of our teams, if we can possibly move U.S. and Canada over before the holiday season, with quality, this year–this year, we want to do so.

BOOMTOWN: Quality, what does that mean?

MARK MORRISSEY: The first one is the experience. For consumers we want to deliver the same quality experience–basically the look and feel before and after the transition.

And the results will get nothing but more and more relevant over time. But the overall experience, the speed, the performance need to be as good or better going forward. For advertisers, there are capabilities that they’ve really enjoyed in Panama that are not in adCenter today. We’re not promising them one-for-one capabilities, but there are investments that we’re making together with Microsoft to bring adCenter up for advertisers and publishers.

In terms of the first one is experience–experience for consumers, advertisers, publishers, and we want the capabilities to be what they expect or better.

Then secondly, it’s around the business metrics….We want to make sure that again for not every single advertiser, not every single publisher, but if you look at in aggregate the groups of major marketplaces, we want the overall performance and business metrics, particularly going into the holiday season, it needs to be as good or better going forward.

So, quality is about the experience itself, measured probably in terms of capabilities, and then there’s the business metrics, and we need to make sure that their yield is as good.

GREG NELSON: And there’s great alignment on that. It’s a 10-year partnership at minimum, hopefully longer, and you want to get off on the right foot with everybody: Consumers, advertisers, publishers. You want them to feel like this is a strong launch, it’s a credible alternative, and we’re in.

So, we’re not going to rush it. If the companies don’t feel ready, like we can really achieve that, then, of course, we’re better to wait.

BOOMTOWN: Well, there is some pressure.

GREG NELSON: The time line that we started to communicate to–publicly, specifically–our advertisers and publishers, is our goal is to have, you know, as pretty confident, algo transition, U.S. and Canada, will happen this year.

We want the paid transition to happen this year, if we can do so with quality, before the holiday season. We’ve got to protect the holiday season at all costs here. And then the next big part of the goal is we have to have it all done by Q2 of 2012.

So, right now we’re finalizing with each of our markets what that sequence will be in terms of the countries, starting in the first quarter of next year, and then we just roll all the way through to that last year.

BOOMTOWN: And how have the cultural changes [been managed]?

GREG NELSON: It’s interesting, because, of course, walking into this I had sort of a point of view and some apprehension, like “Wow, is this going to be really hard.”

It’s been far easier than I had expected, and I think part of that is just that Mark and I get along very well. We’re both kind of pragmatic and it takes a lot to kind of get us ruffled. So, I think we have similar styles. And the people that we’ve hired, we’ve really focused on finding people that are resilient and emotionally mature, and it will sort of steer something of this complexity over a long period of time.

So, I think you often read about, oh, Microsoft has this one culture, Yahoo has another. In practice, at least between these teams, I haven’t found that to be true.

MARK MORRISSEY: Well, right, and the interests here and the incentives that sort of reinforce those interests are very aligned. The way that the partnership was put together, we all have this one big goal, and we’ve hired people that are just really strongly committed to getting that done, and you have support from both companies at the CEO level down. It’s the top priority for both companies. It’s been far easier than I thought.

BOOMTOWN: But in terms of disgruntlement at Yahoo over not being in search technology anymore, how did you cope with that?

MARK MORRISSEY: So, first, we are in search, we’re always going to be in search. There’s an element of that particular part of the search technology that we’re not going to be in. Yeah, there were some disgruntled employees, there always will be when you make a hard decision.

But, in general, employees have responded very well, and the level of commitment that we’ve seen from the Yahoo end, work that we have to do, because this is an extraordinarily complex transition process where we have to connect our front-end to Microsoft’s back-end, and it’s got to work at tremendous scale.

I don’t know if you had a chance to see my presentation from investor day, but one of the things that I showed was some of the screenshots of what we already have in test. February wasn’t that long ago. To have gotten regulatory approval for us, to get through the mountain of requirements and use cases that we had to figure out, to have gotten the API, agreement on the APIs, and to get the coding behind those APIs and get into test by June is phenomenal.

It’s really just a long way of saying that doesn’t happen unless the Yahoos that are working on this are incredibly committed to the future of where Yahoo is going, and the future of working together with Microsoft to achieve this objective.

So, while there will always be disgruntled employees, if you look at the larger population, I mean, we have people that are not just working, they’re working unbelievably hard to make this happen.

BOOMTOWN: Now, the search experience teams are competitive teams.

MARK MORRISSEY: Some are competitive and there are some places that we’re working together. It’s a mix of both.

BOOMTOWN: Such as? Bing has been very impressive in terms of their innovation.

MARK MORRISSEY: Absolutely.

GREG NELSON: Right, and then there’s a separate conversation which is longer term, and, you know, it’s the sort of thing that would feel great to work on if we could do it right now, but right now we’re sort of just trying to ship.

But, both companies have unique assets that we’d love to put into the search alliance, and we want to drive that conversation. And right now we just want to make sure that we get Yahoo to parity of their existing experience, and then we also want to have that conversation about how do we build strength.

MARK MORRISSEY: Another way of looking at it is this is the first agreement in the industry where we have full parity in the platform.

So, as Microsoft invests in innovation around the experience, that’s going to require changes in the platform. As Yahoo invests in things that we want to do in the search experience, that will require changes in the platform. So, we’re always going to meet in the middle at the platform anyway.

Now, that’s not to say that every single thing that we decide to do around entertainment will be the same things that Microsoft decides to do. Some of the things we want to innovate independently, because we’ll discover more things and really move the ball forward. But we already have established a very strong working relationship around how we make those platform decisions, because there are things that Yahoo does today that are quite different than the way Microsoft does them today.

In order for us to get to that comparable experience, this could have been a fight to the death, right? Why would we want to do that in the Microsoft platform? And they’d say, well, “No, we don’t want to do it.”

What we did–and again I think it speaks to the maturity of both of our teams–is we just worked through use cases. Well, what are consumers really trying to do here, how has Microsoft been approaching solving that problem, how is Yahoo doing that. I thought we worked not just agreeable solutions, but ones that moved the ball forward for both of us.

But I’m anxious to get into those future conversations much more. But right now we’ve got to ship.

GREG NELSON: That’s the next chapter. The chapter right now is everybody’s head is down trying to just land Yahoo properly on the platform, and with the great equivalent searching experience.

BOOMTOWN: And when you have complaints? [Microsoft is the] vendor essentially and [Yahoo] the customer.

MARK MORRISSEY: The structure of the agreement, we really worked hard. This goes way back to the very first discussions that we had. We wanted to have aligned incentives where we set up this codependence that kept us really working well together through each of our respective roles. So, by and large, the issues or concerns, why isn’t this working, why don’t I have this capability, you know, it’s Google does it this way…we are going to be a major voice of the customer to the Microsoft teams.

In the structure of the agreement we have both this operational rigor of how do we bring those things in, how do we make marketplace decisions, which are really important. They have the technology, we have the customer-facing piece–and then how do we make road map decisions.

So, throughout transition I have approval authority in Microsoft’s platform road maps, and then going forward then we have a way of we keep providing that type of input.

It’s not a typical vendor-customer complaint process, it’s much more of a partnership, but we each have respective roles where one of us is more the vendor and one of us is more the customer.

So, for the platform they’re more the vendor, we’re more the customer. For sales we’re the vendor, they’re the customer.

And that keeps us again this kind of healthy codependence. And again to leverage–that aligns with each of our strengths.

BOOMTOWN: Is there such a thing as a healthy codependence?

GREG NELSON: Just watch.

Implementation of the deal, which will see Microsoft’s Bing powering Yahoo searches and Yahoo handling sales of search ads for both companies, is “expected to begin in the coming days.” The companies have set a goal of completing it in the U.S. by the end of 2010.

It is worth noting that while Yahoo (YHOO) is transitioning its algorithmic and paid search platforms to Microsoft (MSFT), the search user experience is still its responsibility. In other words, this deal is no quick panacea, and Yahoo must remain on point and innovating if it is to make the most of the alliance.

Anyway, approval of the deal in the U.S. and abroad was clearly a relief to both companies, and Yahoo CEO Carol Bartz and Microsoft CEO Steve Ballmer applauded it in dueling banjo remarks.

“This breakthrough search alliance means Yahoo! can focus even more on our own innovative search experience,” Bartz said. “Yahoo! gets to do what we do best: combine our science and technology with compelling content to build personally relevant online experiences for our users and customers.”

Ballmer was equally enthusiastic. “Although we are just at the beginning of this process, we have reached an exciting milestone,” he said. “I believe that together, Microsoft and Yahoo! will promote more choice, better value and greater innovation to our customers as well as to advertisers and publishers.”

Yahoo! and Microsoft to Implement Search Alliance
Completion of U.S., European Review Clears Way for Agreement to Move Forward

SUNNYVALE, Calif. & REDMOND, Wash., Feb 18, 2010 — Microsoft and Yahoo! announced today that they have received clearance for their search agreement, without restrictions, from both the U.S. Department of Justice and the European Commission, and will now turn their attention to beginning the process of implementing the deal.

Implementation of the deal is expected to begin in the coming days and will involve transitioning Yahoo!’s algorithmic and paid search platforms to Microsoft, with Yahoo! becoming the exclusive relationship sales force for both companies’ premium search advertisers globally. Once the transition is completed, the companies’ unified search marketplace will deliver improved innovation for consumers, better volume and efficiency for advertisers and better monetization opportunities for web publishers through a platform that contains a larger pool of search queries.

“This breakthrough search alliance means Yahoo! can focus even more on our own innovative search experience,” said Yahoo! Chief Executive Officer Carol Bartz. “Yahoo! gets to do what we do best: combine our science and technology with compelling content to build personally relevant online experiences for our users and customers.”

Microsoft CEO Steve Ballmer concurred with Bartz’s assessment. “Although we are just at the beginning of this process, we have reached an exciting milestone,” Ballmer said. “I believe that together, Microsoft and Yahoo! will promote more choice, better value and greater innovation to our customers as well as to advertisers and publishers.”

Consumer Search Experience

Under terms of the agreement, which was announced in late July 2009, Microsoft will provide Yahoo! with the same search result listings available through Bing, and Yahoo! will innovate around those listings by integrating rich Yahoo! content, enhanced listings with conveniently organized information about key topics, and tools to tailor the experience for Yahoo! users.

Yahoo! will focus on providing a compelling and innovative search experience that allows people to find and explore the things, people and sites that matter most to them. While Microsoft will provide the underlying platform, both companies will continue to create different, compelling and evolving experiences, competing for audience, engagement and clicks.

Transition Timeline

Yahoo! and Microsoft will work with advertisers, publishers and developers on a customized plan designed to make the transition as efficient and seamless as possible. Both companies will begin working closely with most partners well in advance of their planned transition to the Microsoft platform and will communicate important information to partners about the transition periodically via phone, email, webinars and a newly created website at www.searchalliance.com.

The companies will begin the transition of algorithmic search and have set a goal of completing that effort in at least the United States by the end of 2010. The companies also hope to make significant progress transitioning U.S. advertisers and publishers prior to the 2010 holiday season, but may wait until 2011 if they determine that the transition will be more effective after the holiday season. All global customers and partners are expected to be transitioned by early 2012.

Customer Relationships

Once the transition is in place, Yahoo! and Microsoft will each represent and provide customer support to different advertiser segments. Yahoo!’s sales team will exclusively represent and support high volume advertisers, SEO and SEM agencies, and resellers and their clients. Microsoft will represent and support self-service advertisers.

Regulatory Summary

Although the transaction previously was cleared by regulators in Australia, Brazil and Canada, the terms of the agreement required clearance by U.S. and European regulators before it could commence. Meanwhile, Microsoft and Yahoo! continue to work with regulators in Korea, Taiwan, and Japan to ensure that they have all relevant information necessary to evaluate the transaction before the deal commences in those specific jurisdictions.

This afternoon, just a few hours after announcing the not-with-a-bang-but-a-whimper conclusion of its negotiations with Microsoft (MSFT), Yahoo (YHOO) said it had inked a non-exclusive search-advertising deal with Google that could, could, be worth about $800 million in annual revenues.

Yahoo explained the deal in another one of its retina-tormenting purple-font press releases entitled “Yahoo to Strengthen Competitive Position in Online Advertising Through Non-Exclusive Agreement With Google.”

Under the terms of the agreement, Yahoo will select the search term queries for which–and the pages on which–Yahoo may offer Google paid search results. Yahoo will define its users’ experience and will determine the number and placement of the results provided by Google and the mix of paid results provided by Panama, Google or other providers. The agreement applies to paid search and content match and does not apply to algorithmic search.”

Yahoo! believes that this agreement will enable the Company to better monetize Yahoo!’s search inventory in the United States and Canada. At current monetization rates, this is an approximately $800 million annual revenue opportunity. In the first 12 months following implementation, Yahoo! expects the agreement to generate an estimated $250 million to $450 million in incremental operating cash flow.”

And what might it generate for Google? The companies are hoping for at least $83 million gross — every 4 months. From Yahoo’s latest SEC filing:

Google may terminate the Services Agreement if, after ten months after the Services are first launched, and each month thereafter, the gross revenues recognized by Google under the Services Agreement are less than $83,333,333 for the four prior calendar months.

Anyway … although the two companies are not required to receive regulatory approval for the deal before moving ahead with it, they’ve helpfully agreed to delay implementation for up to three and a half months while the U.S. Department of Justice reviews the arrangement. “We have been in contact with regulators about this arrangement, and we expect to work closely with them to answer their questions about the transaction,” Google’s Omid Kordestani wrote in a post to the company’s blog. “Ultimately we believe that the efficiencies of this agreement will help preserve competition.”

[Image Credit: AdRants]

This afternoon, just a few hours after announcing the not-with-a-bang-but-a-whimper conclusion of its negotiations with Microsoft (MSFT), Yahoo (YHOO) said it had inked a non-exclusive search-advertising deal with Google that could, could, be worth about $800 million in annual revenues.

Yahoo explained the deal in another one of its retina-tormenting purple-font press releases entitled “Yahoo to Strengthen Competitive Position in Online Advertising Through Non-Exclusive Agreement With Google.”

Under the terms of the agreement, Yahoo will select the search term queries for which–and the pages on which–Yahoo may offer Google paid search results. Yahoo will define its users’ experience and will determine the number and placement of the results provided by Google and the mix of paid results provided by Panama, Google or other providers. The agreement applies to paid search and content match and does not apply to algorithmic search.”

Yahoo! believes that this agreement will enable the Company to better monetize Yahoo!’s search inventory in the United States and Canada. At current monetization rates, this is an approximately $800 million annual revenue opportunity. In the first 12 months following implementation, Yahoo! expects the agreement to generate an estimated $250 million to $450 million in incremental operating cash flow.”

And what might it generate for Google? The companies are hoping for at least $83 million gross — every 4 months. From Yahoo’s latest SEC filing:

Google may terminate the Services Agreement if, after ten months after the Services are first launched, and each month thereafter, the gross revenues recognized by Google under the Services Agreement are less than $83,333,333 for the four prior calendar months.

Anyway … although the two companies are not required to receive regulatory approval for the deal before moving ahead with it, they’ve helpfully agreed to delay implementation for up to three and a half months while the U.S. Department of Justice reviews the arrangement. “We have been in contact with regulators about this arrangement, and we expect to work closely with them to answer their questions about the transaction,” Google’s Omid Kordestani wrote in a post to the company’s blog. “Ultimately we believe that the efficiencies of this agreement will help preserve competition.”

[Image Credit: AdRants]