As Google Search Spikes, Yahoo Loses 'Toolbar' Deals

The Wall Street Journal default

One Web research service, comScore, had Yahoo at 20.6 percent of online searches in the U.S. in February. Google leads the market by a wide margin—comScore had it at 63 percent for February—and Microsoft lags with about 8 percent.

The numbers aren't getting better for Yahoo, either. More recent data from Barron's suggested Google increased its share to as high as 72.4 percent in March while Yahoo dropped to 16.36 percent.

According to the Journal, Yahoo's agreements with HP and Acer ended last year, but it could be at least another year before those losses are keenly felt, considering the rate at which consumers replace their computers. The default search toolbar on HP browsers is now Microsoft Live Search, and Google became the toolbar of choice on Acer machines in October.

Search advertising is a crucial moneymaker for Google, Yahoo and other search services. The Journal quoted figures from the Interactive Advertising Bureau showing search advertising as a $10.5 billion market in 2008 and the largest segment of the online ad market overall. Yahoo, which earned $7.2 billion last year, is said to make 40 percent of that from search ads, according to analysts.

New Yahoo CEO Carol Bartz still has plenty of worthwhile tools at her disposal, and has said in recent weeks that Yahoo was still open to an acquisition deal despite months of speculation and start-and-stop with Microsoft.

For its part, Google hasn't exactly slowed down with tweaks to its own search platform. Earlier this week, Google debuted a new local search feature that by identifying a user's location by his or her IP address allows a user to get local results with nonspecific keywords. For example, someone using an IP address from downtown Boston could type "pizza" or "chowder" and Google tailors a search for those items to pizza places and seafood restaurants within a few blocks.

"How do we guess your location? In most cases we match your IP address to a broad geographical location," wrote Jenn Taylor and Jim Muller, Google Software Engineers, in a Google blog post Tuesday. "You can also specify using the 'Change location' link on the top right corner above the map."