Bing’s share of the search market leaped to 10.7 percent in August, from nine percent in July–a month-over-month increase of of 22.1 percent. Meanwhile, Google’s (GOOG) share grew to 64.6 percent–a month-over-month increase of of 2.6 percent. And Yahoo (YHOO) lost share to its new partner, falling 1.1 percent to 16 percent, a month-over-month decline of 4.2 percent. (Click on table below to enlarge.)

Which makes Bing the fastest-growing search outfit around, with a growth rate more than eight times greater than Google’s. Quite an achievement given Google’s de facto monopoly over search and the fact that Bing launched just a few months ago. Clearly, Microsoft’s new offering is picking up momentum despite Google’s repeated dismissals of it.

“Microsoft has announced a Google killer search product about once a year for the past six years,” Google CEO Eric Schmidt said of Bing after it debuted. “And they need to offer a better product than the one they did last year. I think it’s too early to say with Bing how well it will do. They have some advantages because of the Windows monopoly where they can encourage people–in our view unfairly–to use Bing, but let’s see what the end users choose. We always start from the premise ‘what do the end users want’ and we continue to find in our studies that what Google offers is what they want.”

Yeah, until someone comes along and offers them something better.

“Well, sure. You think I’m stupid?”

– Yahoo CEO Carol Bartz answers the question, “Would you have taken the Microsoft deal that Yahoo turned down a year ago?”

“The dream of Yahoo as a Silicon Valley giant playing a lead role in one of the fastest growing and most profitable parts of the Internet business is now over.”

– Tradition Capital Management analyst George Kurian

“The mass digitization of books promises to bring tremendous value to consumers, libraries, scholars, and students,” the Alliance says in its mission statement. “The Open Book Alliance will work to advance and protect this promise. And, by protecting it, we will assert that any mass book digitization and publishing effort be open and competitive. The process of achieving this promise must be undertaken in the open, grounded in sound public policy and mindful of the need to promote long-term benefits for consumers rather than isolated commercial interests. The Open Book Alliance will counter Google, the Association of American Publishers and the Authors’ Guild’s scheme to monopolize the access, distribution and pricing of the largest digital database of books in the world. To this end, we will promote fair and flexible solutions aimed at achieving a more robust and open system.”

Rallying behind that cry is an array of nonprofit author groups, library institutions, and Google (GOOG) rivals that includes the American Society of Journalists and Authors, the New York Library Association, Microsoft (MSFT), Yahoo (YHOO) and Amazon (AMZN), which only confirmed its membership in the Alliance today. All of these participants fear that the Google Book Search Settlement, which will restore access to millions of out-of-print books, could one day give the company a monopoly on the largest digital library in the world.

With a Sept. 4 deadline for submissions to the court reviewing the settlement approaching, we’re likely to hear increasingly more cries that the settlement is bad for consumers, libraries, schools, authors and publishers.

This morning, Yahoo said it is acquiring Maktoob.com, an Arabic online portal that boasts some 16 million users. Terms of the agreement weren’t disclosed, but paidContent values it at between $75 million and $80 million.

“Access to information and communications tools can positively impact people’s lives in many ways,” Yahoo CEO Carol Bartz said in a statement, “and with the acquisition of Maktoob.com and our investment in the region, the Arab world will soon get a Yahoo experience in Arabic with relevant local language content, programming and services.”

For Yahoo (YHOO), which is working to expand its international footprint, the move is an important one. While there are more than 320 million Arabic speakers worldwide, less than one percent of online content is in Arabic. The market is still in its early stages and it is already underserved. In other words, it represents a tremendous opportunity for local versions of Yahoo Search, Mail, Messenger and other properties.

“This deal is part of Yahoo!’s broader strategy to grow our international business, particularly in emerging markets,” Keith Nilsson, Yahoo’s Senior Vice President of Emerging Markets, said in a blog post. “In many countries, vast populations–and advertisers–are just starting to come online. The potential is tremendous. Yahoo! has a large and growing audience in these markets today, and our acquisition of Maktoob represents the kind of investment we’re making to cater to the needs of these promising regions.”

This morning, Yahoo said it is acquiring Maktoob.com, an Arabic online portal that boasts some 16 million users. Terms of the agreement weren’t disclosed, but paidContent values it at between $75 million and $80 million.

“Access to information and communications tools can positively impact people’s lives in many ways,” Yahoo CEO Carol Bartz said in a statement, “and with the acquisition of Maktoob.com and our investment in the region, the Arab world will soon get a Yahoo experience in Arabic with relevant local language content, programming and services.”

For Yahoo (YHOO), which is working to expand its international footprint, the move is an important one. While there are more than 320 million Arabic speakers worldwide, less than one percent of online content is in Arabic. The market is still in its early stages and it is already underserved. In other words, it represents a tremendous opportunity for local versions of Yahoo Search, Mail, Messenger and other properties.

“This deal is part of Yahoo!’s broader strategy to grow our international business, particularly in emerging markets,” Keith Nilsson, Yahoo’s Senior Vice President of Emerging Markets, said in a blog post. “In many countries, vast populations–and advertisers–are just starting to come online. The potential is tremendous. Yahoo! has a large and growing audience in these markets today, and our acquisition of Maktoob represents the kind of investment we’re making to cater to the needs of these promising regions.”

Among the enhancements to Yahoo’s search page design–the features that, in the company’s words, “exemplify how Yahoo! is continuing to innovate in search technology and the user experience”–are the following:

• a unified, Bing-like design
• an enhanced search assistant
• the ability to play video within search results
• a set of filters that allow users to refine their searches based on prior queries or follow-on searches of other sites like YouTube, Facebook, LinkedIn and Twitter (click on image below to enlarge).

“The Web is huge, billions of pages, millions and millions of sites and domains,” explained Larry Cornett, Yahoo’s VP of search products and design. “You do not care about all of it. We are bringing front and center the features that are going to make it easier and safer to search.”

Which is all well and good. But isn’t that exactly what Google and Microsoft claim to be doing as well? Doesn’t everyone have a search assistant these days? Doesn’t Microsoft’s Bing already offer in-line video viewing in its search results? (Google once did as well, but disabled the feature over performance issues.) And aren’t Yahoo’s filters basically another version of Google’s “Show More Results” feature? They certainly appear to be.

So these things aren’t true innovations; rather, they’re innovations of the new-to-Yahoo sort. They’re table stakes at a search game that Yahoo has already lost. So “bringing front and center the features that are going to make it easier and safer to search” doesn’t really mean much when they’re already front and center in market-leading offerings, as Danny Sullivan notes over at Search Engine Land.

“There are certainly some aspects that are becoming commoditized in the foundation in search,” Cornett said. “You can either overwhelm people and give them millions and millions of results or show them what they care about the most. That is exactly where we’re going to continue, building a search experience that understands what they’re looking for.”

That sounds great–except it’s not anything different from what Microsoft says. And if Google doesn’t say it, that’s because searchers are voting with their actual search activity that Google’s already doing it. In addition, while Cornett suggested that Yahoo is somehow spending huge amounts of time and money coming up with a better personalized experience over competitors, the fact remains that Google has long offered personalized results that outdistance Yahoo.

Rallied by the Internet Archive and veteran Silicon Valley antitrust lawyer Gary Reback, Amazon (AMZN), Microsoft (MSFT), Yahoo (YHOO), the Special Libraries Association, the New York Library Association and the American Society of Journalists and Authors are forming a coalition called the Open Book Alliance. Its purpose: To make the case to an already concerned Justice Department that the $125 million settlement–which will allow Google to digitize some 18 million books–is an anticompetitive restructuring of the book industry and one that could give Google a monopoly on the largest digital library of books in the world.

And it might. There are some who claim the plan grants Google (GOOG) a blanket license on millions of so-called orphan books, works still in copyright but whose copyright owners are unknown.

But Google insists the deal is nonexclusive and says other companies are free to pursue their own agreements with the publishing industry. The company further notes that its efforts will not only restore access to some 10 million out-of-print books that are still under copyright, but provide their authors with a new means of profiting from them. The deal is beneficial, Google contends, to consumers and to the publishing industry.

And to Google as well, because there is always a profit motive to the company’s altruism.

That said, Google does have a point here. Restoring access to millions of books that are today unavailable in any medium is a worthy goal. So is enabling their authors and publishers to once again make a bit of money from them. Is there a better option for the publishing industry at this moment? Allow those works to lie fallow and unmonetized?

[Image Credit: Forrester Magazine]

The company has once again achieved top rank among Internet search engines and portals in the American Consumer Satisfaction Index, the seventh time it has done so in eight years. This year Google (GOOG) received 86 points, out of a possible 100, besting Yahoo’s (YHOO) 77 points, Microsoft’s (MSFT) 75, Ask.com’s 74 and AOL’s 70.

That’s a nice lead and one Google should have no trouble maintaining if it stays its course. This, in spite of Microsoft’s new search effort, Bing, and its “boatloads of value” search deal with Yahoo.

Though the latest ACSI scores don’t reflect either (they were complied prior to Bing’s launch and the Microsoft-Yahoo announcement) Larry Freed, president and CEO of ForeSee Results, which compiles the rankings, doesn’t see them doing much to undermine Google. As Freed notes, Google is unquestionably king of search and the only competition in ACSI’s search category is for second place.

“Where will Bing’s market share come from? From Yahoo and MSN initially and maybe from Ask.com, though Ask is a niche player with stable customer satisfaction and market share,” Freed said. “It seems unlikely that customers will actually leave Google in enough numbers to allow Bing to seriously challenge Google’s market dominance, given Google’s extremely high customer satisfaction.”

Freed adds: “People are happy with Google, so why would they switch? They might switch if Bing is better, and that’s a tall order considering Google is the second-highest scoring ACSI service-sector company, behind Newegg.com. Bing has been called a search engine war ‘game changer,’ but Google’s game will be very hard to change at this point. If anyone can do it, it’s the combined resources and market share of Yahoo and MSN.”

Worldwide spending on Internet advertising declined by five percent in the second quarter of this year, slipping to $13.9 billion from $14.7 billion, according to research firm IDC. That’s the second consecutive quarter that revenue has dropped year-over-year, and IDC expects it to do so again in the current quarter.

“We think the industry will continue to see losses in the third and fourth quarters, but the growth rates–or the loss rates, if you will–will eventually begin to improve,” IDC analyst Karsten Weide said in a statement. “We believe the industry may have to wait until mid-2010 until we see real growth again.”

That’s a bit long to wait. Still, it’s nice to hear things will turn around some day, because the hits the online advertising industry has taken have been brutal. In this last quarter, classified advertising fell 17 percent and display advertising 12 percent, dragging Monster.com (MWW), Yahoo (YHOO), AOL and others with them. Only Google (GOOG) remained unscathed, posting low single-digit growth.

Typical.

Meanwhile, Yahoo (YHOO) and Google (GOOG) lost ground–Yahoo’s share fell to 10.95 percent from 11.04 percent and Google’s to 77.54 percent from 78.48 percent. Together, Microsoft (MSFT) and Yahoo, thanks to their new alliance, claim 20.36 percent of the search marke. That is still far less than Google’s 77.54 percent, but it’s significant nonetheless given the daunting challenge the search sovereign presents. Said StatCounter CEO Aodhan Cullen: “Bing continues to make slow but steady progress but the combined Yahoo! figures suggests that the deal announced last week will have to demonstrate major future synergies if it is to make any dent in Google’s dominance.”

“I think it is an excellent deal.”

– Investor-agitator Carl Icahn on the Microsoft-Yahoo search advertising partnership that replaced the Microsoft-Yahoo merger for which he once pined

“This is the one that stuns me, that people haven’t figured it out,” Ballmer said of investor response to the “boatloads of value” the deal will supposedly bring to Yahoo. “It’s sort of, like, unbelievable.”

As Kara quipped earlier this morning, “Believe it, Steve, especially since everyone thinks Microsoft pulled a fast one on Yahoo.”

And so, to convince them otherwise, Microsoft (MSFT) and Yahoo (YHOO) have fired up the “Choice. Value. Innovation.” propaganda machine to reassure us all that this is exactly what the their partnership will bring. Below, the first broadsides to issue from that machine, which Microsoft has confirmed are authentic: What Experts are Saying About the Microsoft-Yahoo! Deal and The Yahoo!-Microsoft Search Deal: Benefits to Consumers, Customers and the Internet.

The Yahoo_-Microsoft Search Deal – Benefits to Consumers_ Customers and the Internet

What Experts are Saying about Microsoft-Yahoo Deal

Seems the Street would have much preferred the “boatloads of money” Yahoo CEO Carol Bartz once said she’d demand for a search deal, than the “boatloads of value” she claims to have given them this morning. As I write this, Yahoo (YHOO) shares are trading down more than 12 percent at $15.14. Microsoft (MSFT) shares are up 1.41 percent at $23.80.

Below, a roundup of analyst notes that have been issued on the deal.

Jeff Lindsay, Bernstein Research: We believe Yahoo!’s search deal represents a significant positive for the company’s economics, as both Yahoo! and MSFT were too subscale to compete effectively versus Google. Although the combined 30% search share is still less than half the size of Google, both Yahoo! and MSFT will realize significant cost savings from combining their search technologies. In addition, the greater scale should increase the effectiveness of the search engine, driving revenue synergies through improved search monetization.

Sarah Friar, Goldman Sachs: We view the deal as positive for Microsoft as terms are better for the company than had been speculated (no upfront fee; 88% TAC) and the combined market share provides scale to drive efficiency and legitimacy/relevancy for Microsoft’s online investments. Yahoo!’s $3.0 bn/year search sales translates to $360 mn/year for Microsoft in revenues. Microsoft will incur incremental expenses when the deal closes (expected early CY10), but limited (if any) impact on FY10E and while investments will continue into FY11, our model already assumes sizable expenses.

Douglas Anmuth, Barclays: YHOO-MSFT terms not nearly as favorable as anticipated, but we believe deal is neutral to the co’s L-T positioning. We would have liked to have seen an upfront payment, higher TAC, & rev share on Bing.com searches among other things, but we like that YHOO maintains ability to sell search adv, & therefore relationship with its largest advertisers. It’s unclear how favorable the deal will be to YHOO over time, but our fundamental reasons for owning shares remain the same. We expect better execution on the audience & content biz & specifically within display adv., & we believe YHOO will be able to take out a meaningful amount of costs from the biz aside from search tech. over the next couple yrs.

Peter Misek, Cannacord Adams: We are relieved that Microsoft did not have to provide an upfront payment as part of this deal while effectively garnering more scale. This deal provides Microsoft with a much needed boost in competing with Google (GOOG : NASDAQ : US$435.00 | BUY) as its search algorithm, Bing, is being catapulted to greater market share. In addition, utilizing Yahoo!’s sales force for premium search will allow Microsoft to lower expenses over the duration of the partnership while attempting to attract a greater level of advertisers for the combined platforms. We believe this is a much needed relief for Microsoft, but is one step in a greater battle. In the end this doesn not solve Microsoft’s competitive disadvantage with Google. Rather we think it accelerates Microsoft’s desire to think outside the box and come up with a non-linear way to catch Google.

Heath Terry and Andrew Thomas, FBR Capital Markets: The lack of an up-front payment, no minimum revenue guarantee, and a revenue share that, while above average, is slightly below the +90% that larger deals command make for a lackluster deal for Yahoo!, in our opinion. The lack of any display component to the deal also seems like a missed opportunity for the company. As we see it, the only financial benefit to Yahoo! is the ability to shed the not insignificant technology costs associated with running a search engine. According to the company, this should result in an annual benefit to GAAP operating income of $500M….Restructuring these two businesses and untangling them from their existing partnerships and internal ties will be a massive organizational challenge for both companies.

Mark Mahaney, Citi Investment Research: Implications For YHOO – Positives: 1) YHOO believes deal would generate incremental $250MM in annual cash flow (17% accretive to our ’09 est)–assumptions very hard to test, but magnitude is reasonably conservative; 2) 88% TAC is higher than industry average, but as expected given deal size. Challenges: 1) No upfront payment to YHOO is a negative vs. expectations, tho guaranteed RPS provides significant backstop; 2) Lack of display advertising deal is a negative vs. expectations; & 3) Acknowledgment of YHOO’s Search technology limitations.

Todd Greenwald, Signal Hill Capital Group: The deal announced today will take a very long time to come to fruition we think, and will face several challenges–it will face regulatory hurdles given Microsoft’s antitrust history (though we’d expect it to ultimately get through given Google’s dominance). Additionally, it seems hard to fathom operationally, as it will require Yahoo’s salespeople to be selling Microsoft’s technology. Advertisers will want one point of contact (which would be Yahoo), though that point of contact won’t be entirely responsible for what they are selling–instead of bringing in an engineer from within the same building, the Yahoo salesperson may have to coordinate with a Microsoft employee up in Redmond. Not impossible, just tricky. And considering how smooth and automated the process of buying ads is on Google’s platform, this could prove to be a competitive disadvantage.

Mark May, Needham & Company: Search advertising is not a zero sum game, in our opinion. If Microsoft is able to make Yahoo! (and Microsoft) search more effective through this deal/combination, then we believe is will result in advertising spending more on the new search platform but not less on the Google platform. A more effect Yahoo!/Microsoft search platform does not mean Google search becomes less effective, and we believe there is more demand than supply for effective search marketing. The dollars will likely come from other, less effective, buckets.

Business 101 convincingly argues that most large M&A deals and partnerships are not successful. And, most large-scale Internet media M&A deals and partnerships have tended to under-perform their original promise (e.g., AOL Time Warner, Google/MySpace, etc.). Moreover, in the case of Yahoo!/Microsoft Search, you have two very different cultures and an expected 24 month transition process. The odds are stacked against this deal having a meaningfully impact on Google. And, over the next 2+ years while Yahoo! and Microsoft are trying to transition, Google will be innovating.

Seems the Street would have much preferred the “boatloads of money” Yahoo CEO Carol Bartz once said she’d demand for a search deal, than the “boatloads of value” she claims to have given them this morning. As I write this, Yahoo (YHOO) shares are trading down more than 12 percent at $15.14. Microsoft (MSFT) shares are up 1.41 percent at $23.80.

Below, a roundup of analyst notes that have been issued on the deal.

Jeff Lindsay, Bernstein Research: We believe Yahoo!’s search deal represents a significant positive for the company’s economics, as both Yahoo! and MSFT were too subscale to compete effectively versus Google. Although the combined 30% search share is still less than half the size of Google, both Yahoo! and MSFT will realize significant cost savings from combining their search technologies. In addition, the greater scale should increase the effectiveness of the search engine, driving revenue synergies through improved search monetization.

Sarah Friar, Goldman Sachs: We view the deal as positive for Microsoft as terms are better for the company than had been speculated (no upfront fee; 88% TAC) and the combined market share provides scale to drive efficiency and legitimacy/relevancy for Microsoft’s online investments. Yahoo!’s $3.0 bn/year search sales translates to $360 mn/year for Microsoft in revenues. Microsoft will incur incremental expenses when the deal closes (expected early CY10), but limited (if any) impact on FY10E and while investments will continue into FY11, our model already assumes sizable expenses.

Douglas Anmuth, Barclays: YHOO-MSFT terms not nearly as favorable as anticipated, but we believe deal is neutral to the co’s L-T positioning. We would have liked to have seen an upfront payment, higher TAC, & rev share on Bing.com searches among other things, but we like that YHOO maintains ability to sell search adv, & therefore relationship with its largest advertisers. It’s unclear how favorable the deal will be to YHOO over time, but our fundamental reasons for owning shares remain the same. We expect better execution on the audience & content biz & specifically within display adv., & we believe YHOO will be able to take out a meaningful amount of costs from the biz aside from search tech. over the next couple yrs.

Peter Misek, Cannacord Adams: We are relieved that Microsoft did not have to provide an upfront payment as part of this deal while effectively garnering more scale. This deal provides Microsoft with a much needed boost in competing with Google (GOOG : NASDAQ : US$435.00 | BUY) as its search algorithm, Bing, is being catapulted to greater market share. In addition, utilizing Yahoo!’s sales force for premium search will allow Microsoft to lower expenses over the duration of the partnership while attempting to attract a greater level of advertisers for the combined platforms. We believe this is a much needed relief for Microsoft, but is one step in a greater battle. In the end this doesn not solve Microsoft’s competitive disadvantage with Google. Rather we think it accelerates Microsoft’s desire to think outside the box and come up with a non-linear way to catch Google.

Heath Terry and Andrew Thomas, FBR Capital Markets: The lack of an up-front payment, no minimum revenue guarantee, and a revenue share that, while above average, is slightly below the +90% that larger deals command make for a lackluster deal for Yahoo!, in our opinion. The lack of any display component to the deal also seems like a missed opportunity for the company. As we see it, the only financial benefit to Yahoo! is the ability to shed the not insignificant technology costs associated with running a search engine. According to the company, this should result in an annual benefit to GAAP operating income of $500M….Restructuring these two businesses and untangling them from their existing partnerships and internal ties will be a massive organizational challenge for both companies.

Mark Mahaney, Citi Investment Research: Implications For YHOO – Positives: 1) YHOO believes deal would generate incremental $250MM in annual cash flow (17% accretive to our ’09 est)–assumptions very hard to test, but magnitude is reasonably conservative; 2) 88% TAC is higher than industry average, but as expected given deal size. Challenges: 1) No upfront payment to YHOO is a negative vs. expectations, tho guaranteed RPS provides significant backstop; 2) Lack of display advertising deal is a negative vs. expectations; & 3) Acknowledgment of YHOO’s Search technology limitations.

Todd Greenwald, Signal Hill Capital Group: The deal announced today will take a very long time to come to fruition we think, and will face several challenges–it will face regulatory hurdles given Microsoft’s antitrust history (though we’d expect it to ultimately get through given Google’s dominance). Additionally, it seems hard to fathom operationally, as it will require Yahoo’s salespeople to be selling Microsoft’s technology. Advertisers will want one point of contact (which would be Yahoo), though that point of contact won’t be entirely responsible for what they are selling–instead of bringing in an engineer from within the same building, the Yahoo salesperson may have to coordinate with a Microsoft employee up in Redmond. Not impossible, just tricky. And considering how smooth and automated the process of buying ads is on Google’s platform, this could prove to be a competitive disadvantage.

Mark May, Needham & Company: Search advertising is not a zero sum game, in our opinion. If Microsoft is able to make Yahoo! (and Microsoft) search more effective through this deal/combination, then we believe is will result in advertising spending more on the new search platform but not less on the Google platform. A more effect Yahoo!/Microsoft search platform does not mean Google search becomes less effective, and we believe there is more demand than supply for effective search marketing. The dollars will likely come from other, less effective, buckets.

Business 101 convincingly argues that most large M&A deals and partnerships are not successful. And, most large-scale Internet media M&A deals and partnerships have tended to under-perform their original promise (e.g., AOL Time Warner, Google/MySpace, etc.). Moreover, in the case of Yahoo!/Microsoft Search, you have two very different cultures and an expected 24 month transition process. The odds are stacked against this deal having a meaningfully impact on Google. And, over the next 2+ years while Yahoo! and Microsoft are trying to transition, Google will be innovating.

Once again for old time’s sake, the Yahoo (YHOO)-Microsoft (MSFT) soap opera in Digital Daily intros, with apologies to Steven Spielberg, Mel Blanc, Queen, Neil Diamond, Barbra Streisand, Tallulah Bankhead, Marlene Dietrich and the entire cast of “The Sound of Music.” (Originally published June 16, 2008.)

Apparently, investors aren’t too keen on the deal. Why? A number of reasons, according to Needham & Company analyst Mark May. “While the details of the deal can confuse the risks and benefits to Yahoo!, this deal ultimately means that Yahoo! is outsourcing search to Microsoft,” May told Digital Daily. “If you you’re bullish on search, and on the power of having combined strength in both search and display, I think you’d have to view this deal as negative for Yahoo! and positive for Microsoft.” May noted that there are a number of reasons for Yahoo investors to look askance at this deal. Among them:

• There’s no upfront payment.
• The deal requires regulatory approval and isn’t expected to close until 2010.
• The companies don’t expect to see the full benefits of the deal until 24 months after regulatory approval.
• While the companies claim Yahoo “will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers,” most of the value is and will be derived via the self-service channel–which Microsoft will now control.
• The deal could put Yahoo!’s affiliate/syndicated search business at risk.
• The deal’s 10-year length may put Yahoo at Microsoft’s mercy given that there’s only one other supplier–Google (GOOG).

Complete Coverage

• WWGD: What Will Google Do, Now That There Is Finally a MicroHoo?
• Liveblogging the Yahoo-Microsoft Search Deal Conference Call: The Carol and Steve Show Debuts!
• Yahoo Investors on Microsoft Deal: Do Not Want
• Yahoo CEO Carol Bartz’s Letter About the YaSoft Deal
• MicroHoo Deal Finally Official in a 10-Year Landmark Partnership (Plus the Full Press Release)
• Yahoo To Get 110 Percent of Search Revenue in First Two Years of Deal With Microsoft
• Before Yahoo-Microsoft Deal Terms Are Unveiled, Let’s Go to the Videotape From the Last One
• Microsoft-Yahoo Deal Struck–Will Be Announced Within Next 24 Hours

• Week ending June 6: 3.43 percent
• Week ending June 13: 4.57 percent
• Week ending June 20: 5.35 percent
• Week ending June 27: 6.63 percent

“Looking at the weekly percentage of U.S. searches for Bing, the search engine has grown at an average weekly rate of 25 percent for the month of June 2009,” Hitwise explains. “Adding in Live.com and MSN Search along with Bing, the combined search engines have grown at an average of 16 percent during June 2009. Bing grew faster than the three other prominent search engines for the month.”

Impressive. But sadly, not enough for Microsoft (MSFT) to make real headway. Because Bing actually ended up losing market share during June, slipping to 5.25 percent from the 5.64 percent it had in May (click on chart below). Meanwhile, Google (GOOG) gained share, rising to 74.04 percent from 73.66 percent in May. And Yahoo (YHOO) gained as well, starting out the month with a 15.55 percent share and ending it with 16.19 percent.

Now, a one percent increase in market share isn’t a spectacular achievement, but it is meaningful growth. More so since Google posted a slight decline in share in June, its third in as many months.

Google still rules search in the U.S., but Bing appears to be making some modest headway. “Steady if not spectacular might be the best way to describe performance to date,” said Aodhan Cullen, CEO of StatCounter.

Which is fine. Particularly when you’re coming from as far behind as Microsoft (MSFT). Of course, as I’ve said before, early successes like these are driven as much by marketing as by technological prowess and positive user experience. And right now, Bing’s got between $80 million and $100 million dollars behind it. But those dollars will only last so long.

And as Google (GOOG) CEO Eric Schmidt likes to point out, you really can’t expect to buy your way into the search market. “You don’t just buy it with ads,” Schmidt told Fox Business earlier this week. “You earn it, and you earn it customer by customer, search by search, answer by answer.”

Perhaps that’s exactly what Microsoft is doing here with Bing.

Between November 2008 and March 2009, Redmond hired away five Yahoo veterans. First, Sean Suchter, VP of search technology at Yahoo, left to become general manager of Microsoft’s Silicon Valley Search Technology Center. Then Yahoo search scientist Qi Lu followed him after being tapped as president of Microsoft’s Online Services Group. Soon after that, Larry Heck, former VP of search & advertising sciences at Yahoo Labs, accepted a job in the R&D department of the software giant’s online services division. Jan Pedersen, who once served as a chief scientist and VP of Yahoo’s Search and Advertising Technology Group and Dayne Sampson, Yahoo’s VP of operations for search and advertising, followed.

Now comes word that three more Yahoo execs have taken jobs at Microsoft (MSFT). Knut Risvik, Yongdong Wang and Kevin Timmons, all Yahoo veterans, are now headed to Microsoft.

Risvik, once a chief architect at Yahoo (YHOO), will work on Microsoft’s search platform and infrastructure. Timmons, formerly a Yahoo VP of operations, has been charged with running the company’s data center expansion. What Yongdong Wang, once a VP of international search, will do remains to be seen. He is, however, reporting to Harry Shum, Microsoft’s corporate vice president for search product development, so presumably he’ll be doing something similar.

A nice little trifecta for Microsoft and one that surely inspired Yahoo CEO Carol Bartz to drop a frustrated F-bomb or three. As I said back in March: If Yahoo employee defections to Microsoft continue apace, there may come a day when Redmond will no longer need to buy the struggling company’s search business. It will already have acquired it.