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The first truly scary rumor for Google about search: Facebook and Yahoo working together

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Imagine a search engine that truly knew you. No, not in the way that Google or Bing personalize their search results based upon your history and preferences – what if a search engine could take the information that you give about yourself as well as the information that your friends and family put in and cater your search results around your most likely goals and desires from the search? Would you use it?

Marissa MayerIf Marissa Mayer, CEO at Yahoo, has her way, that may be exactly what we see in the future. The plot for the social media giant to work very closely with the former search giant is a combination that should have everyone intrigued… and that should have Google worried.

Every few months something happens that brings on a flurry of blog posts about how Google’s long-standing domination in web search may be coming to an end. They never pan out and this might fall into the same category, but it is the highest-potential threat that’s come along in a while, possibly ever. Facebook has two things going for it – immense stores of data about us and unbeatable levels of attention from its users. Many people are connected to Facebook throughout their waking hours.

Steve BallmerYahoo for its part brings an incredible amount of eyeballs that visit its portal homepage, a huge collection of working email addresses, and search technology that is still used by hundreds of millions despite Google’s dominance. Their relationship with Microsoft in partnering with Bing has not seen huge success and a Facebook alliance could turn this into a two-man race, something that Microsoft doesn’t want to face. They had hoped that they would make a bigger dent than they have in the search market through the Yahoo deal and it simply hasn’t panned out.

They can’t stand on their own. Despite the desire to get out of the ten-year deal with Bing, they do not have the clout or programming talent to survive without them. A deal with Facebook would potentially give them the clout they need and the ability to bring in more talent. They would be propelled from the junior search component of the team to the leader in the new alliance, something that may be appealing from a status perspective even if the sacrifices may hurt them short-term.

Facebook has coveted search for a long time. There was once speculation that they may even buy Bing, but that never became a reality and likely never will. Their choices are to continue their own development of search or partner with Yahoo. It’s unlikely that their status as a public company would allow them to buy Yahoo outright, but a strong partnership forged through mutual benefit is not only appealing, it may be enough to solve some of Facebook’s revenue problems while bringing Yahoo into a state of prominence again.

Jerry YangIf all of this plays out the way that Mayer wants it to, Google will have to respond. This is the first valid threat to their core business from a competitor since the talks of Microsoft buying Yahoo fizzled. Their Google+ social network is in a constant state of good news versus bad news. Sometimes they look like they’re growing to be the huge social network that they hoped and other times they look like a ghost town. Depending on the timing of a Facebook-Yahoo alliance, they may have to escalate their attack on social media if they don’t want to lose all of their footing altogether.

Rumors are often exciting to discuss but in Silicon Valley they’re a dime a dozen. This one seems different for one reason: it makes total sense for both of the parties involved. Google and Microsoft should be worried.

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