There’s no shortage of comment around the blogosphere today about a possible combination of MSN and Yahoo, and its potential to threaten Google’s dominance. But while it’s useful to keep in mind what impact this will have on music, messaging, or other verticals, I’m going to stick with talking about search — because that’s the only advertising-related market in which a combined MSN/Yahoo would directly compete with Google (while AdSense is improving, that’s just repurposed search — and Google is almost a complete non-entity in graphical advertising), and more importantly because that’s where the real money is.

So could a combined MSN/Yahoo search engine compete with Google in Europe? Well, no and yes.

First the no: we’re finishing up a report right now on how European search engines can compete with Google, but the reality is that no one’s going to get near Google’s search share over the next few years. While Google looks pretty dominant in the US — they claimed 58 percent of all US searches in December 2007, said Comscore — it appers that a combined MSN/Yahoo search engine would claim around 33 percent of all US searches. That’s real, viable competition. But unfortunately, even if MSN and Yahoo combine, there will be no such strong challenge in Europe. As I’ve previously discussed, Google has between 80 and 90 percent of search share in the key European markets. So whether this deal happens or not, it’ll be incredibly difficult for anyone to compete with Google for European search share.

On the other hand, perhaps yes: a combination of MSN and Yahoo would definitely be better-positioned to compete with Google for paid search revenues than each company is now. I’ve heard a surprising number of Euroean search marketers say that because MSN and Yahoo each command only a few percentage points of search share in Europe, they don’t even bother advertising on any engine but Google. This proposed combination wouldn’t entirely solve that problem, of course — the combined search entity would still have less than 10 percent search share in the big European markets, according to numbers I’ve seen from various traffic firms — but it would at least give marketers a reason to run trials beyond Google. And that’s a start in the right direction.

I’ll probably have more to say on this as more details emerge and as it becomes clearer whether or not this deal will really happen — but in the meantime if you’re a client or press and want to discuss this further, drop a line to and we can have a chat.