According to Yahoo Finance, which, you would imagine might have an accurate take on such things, Microsoft and Yahoo have finally agreed to a partnership.  You will remember that Microsoft tried to purchase Yahoo outright last year, but the deal fell through.  Instead, Yahoo will now use Microsoft’s Bing search engine to power search, while Yahoo will handle the online advertising. 

Why Yahoo decided to switch to Bing is unclear at this time, as Yahoo’s engine already serves nearly 20% of the market, compared to Microsoft’s 8.4% (and Google’s 65%).  I’m not prepared to speculate further than saying that Yahoo’s value isn’t really in the search engine, but the SAAS solutions that are so ubiquitous, one barely thinks of them.  Yahoo Mail, Yahoo Groups, Flickr, Del.icio.us, Yahoo Voice, and Upcoming.org.  Yahoo still has more overall users on the Web and more overall pageviews than Google.

Details are still sketchy, but the deal doesn’t seem to affect Yahoo’s SAAS offerings.  Perhaps that’s because Microsoft has gotten more aggressive on the online services front since they last tried to acquire Yahoo in February of last year, offering an ad-supported online version of Office.  Actually, that may explain the deal – Microsoft no longer needs to own Yahoo’s cloud software, but it still would benefit from Yahoo’s ad revenue model. 

We’ve talked in general about the effects of cloud computing on application performance. (Long story short: Just because it’s on the cloud doesn’t mean you can forget about making sure apps perform well.) However, one has to consider that if Office goes ad-supported, and widely adopted, how much traffic will be used up serving up those ads – especially if they’re large files, like those annoying flash-based video ads that pop up.  I suppose we’ll find out more as time goes on – whether they’re inconsequential, or eroding network performance in a matter not unlike being nibbled to death by ducks.