Rumor: Yahoo discussing search alliance with Facebook

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Yahoo CEO Marissa Mayer and Facebook COO Sheryl Sandberg are reportedly in talks about how the two companies can work more closely together. The Telegraph notes the two have already collaborated on a number of small projects, and recently agreed to settle their differences in a patent quarrel. However, this time around the focus could be on something more substantial, like forming a search alliance or building a search engine together.

Yahoo is currently tied to a 10-year search contract with Microsoft that puts Bing as the technology provider behind its search results until 2019, while the company focuses solely on selling search advertising. But according to Yahoo insiders cited in the report, the alliance has been problematic due to low revenue per search and Microsoft’s inability to mount a serious challenge against Google. The thinking is Yahoo might be looking at ways to extricate itself from the deal.

Facebook CEO Mark Zukerberg has made no secret of his interest in web search, noting at a recent conference that the social network is is pretty uniquely positioned to answer the questions people have. “At some point we’ll do it. We have a team working on it,” he added.

Working with Facebook might allow Yahoo to piggyback on the social network’s brand and wealth of user-generated data to start forging a serious contender in search. But whether there are any benefits in such a partnership for Facebook is another question. In a separate report, All Things D’s Kara Swisher says her sources scoffed at the rumors and that Facebook is likely to work on its own in such an effort.

Another possibility being thrown around is an alliance between Yahoo, Facebook, and Microsoft -- though that’s  just based on conjecture and wishful thinking more than anything else at this point.

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