In the embattled Internet company’s biggest step yet to carve out a more distinctive strategy in the Web search market, Yahoo said on Wednesday it is introducing a new strategy it calls “Build your Own Search Service” (BOSS).

In addition to deep access developers get to create their own text-link search services, Yahoo is also unlocking its image and news databases to let outsiders create their own permutations of Yahoo News, or Flickr, its photo-sharing site. Yahoo would even supply spell-checking services to partners.

Yahoo is fighting to remain independent in the face of a challenge by dissident investors seeking to dump its management and board in order to reopen talks with Microsoft Corp on a merger to form an Internet giant to compete with Google.

The move highlights Yahoo’s own ambition to continue to compete against Google even as it partners with its crosstown rival in a related market.

Last month, Google and Yahoo reached a deal in which Yahoo will let Google sell a portion of the Web advertising that runs alongside Yahoo’s own search results.
Yahoo estimates that for start-ups to develop new search technologies and run that across the entire Web takes a minimum capital investment of $300 million in terms of hardware, networks, data, coding and expertise.

“We want to disrupt the search market by removing that entry barrier and make room for more players and more ideas,” Prabhakar Raghavan, the chief strategist for Yahoo Search, said in a phone interview.

Were Yahoo’s search services to be embraced by new start-ups, Yahoo envisions a scenario in which its market share might remain steady but its resale partners and developers would explode, taking share from rival Google.

Based on recent industry data, Google had a 62% share of the U.S. Web search market.
Raghavan envisions over time seeing that share sink below 50%, while Yahoo’s own share, now at 21%, might more than double through its resale partnership strategy.
Yahoo is seeking to make its search technology the underlying engine for the next generation of search services, borrowing a tactic familiar in the mobile phone industry, where established operators rent out spare network access to Virgin Mobile, for example, which owns no capacity of their own.

REMOVING BARRIERS TO ENTRY

Raghavan envisions attracting start-ups seeking to build services in the field of social search — where the search results users see are influenced by what their friends find interesting.

He sees the rise of industry-specific search firms focused on medical or finance, for example, or visual search, which allows users to search by image rather than by text.
Two early partners Yahoo has signed up to work on Boss are personalized search start-up Me.dium and natural language firm Hakia, which relies on semantic search technology similar to that of Powerset, which Microsoft recently agreed to acquire.
First Amazon.com Inc, and lately Google have adopted a similar approach by allowing start-ups and other companies to rent access to their massive data centers, storage and certain Web applications. But Yahoo is going several steps further by giving access to sophisticated search technology.

BOSS is the second phase of Yahoo’s year-long effort to remake its Web search strategy. In April, Yahoo introduced SearchMonkey, a service that allows Web site owners and developers to control how Yahoo searches appear on their site.

SearchMonkey allows a site aimed at feline fanciers to display a version of Yahoo search that only has pictures of cats. BOSS goes far beyond how Yahoo search might appear on a Web site to allow a developer to tinker with the basic mechanisms of Yahoo search to build separate services.

BOSS gives creators of new search services deep access to Yahoo search technology including query handling, search ranking, indexing and Web crawling under any label they choose.

Eventually, Yahoo plans to require that customers run Yahoo search advertising alongside searches in exchange for the tools. The strategy for so-called “search monetization” for BOSS will be revealed in the future, Yahoo officials said.

Beyond the commercial potential for BOSS, Yahoo said it is working with top universities including the University of Illinois at Urbana Champaign, Carnegie Mellon, Stanford, Purdue, MIT and the Indian Institute of Technology, Bombay. This promises to allow computer scientists to perform academic research on search trends across the entire Web, something never before affordable due to the cost of such operations.

Courtesy of Reuters Group.

Eric Auchard is a reporter for Reuters.com.

Semantic search has been much ballyhooed of late as the new, hot, smart way to search the Net – it utilizes technology that garners results based on a combo of understanding a word’s meaning and the context in which it’s used.

Financial details weren’t disclosed, but the word on the street is that the software giant ponied up about $100 million – a vastly cheaper purchase price than the initial $44.6 billion Microsoft offered Yahoo.

In its quest to best Google, Microsoft has shelled out about $8 billion in Internet acquisitions in the past two years. But they still have a long way to go: Google accounted for about two-thirds of all online searches in May, while Microsoft came in with 8.5% (Yahoo garnered the lion’s share of the rest).

But wait … is Microsoft’s quest for Yahoo really over? According to a report in The Wall Street Journal, Microsoft is once again eyeing Yahoo’s search business, and has “approached other media companies [Time Warner, News Corp., others] in recent days about joining in a deal that would effectively lead to Yahoo’s breakup,” the Journal states.

As of 9:22 a.m. Yahoo’s shares had climbed to $21.82, up about 8.02%, while Microsoft’s were flat, trading at $26.87.

Many see the move as a direct challenge to search kingpin Google. Powerset – its mission is to search better, faster, more accurately – hopes to conquer online terrain far beyond the boundaries of Wikipedia, but it will use the online encyclopedia as a training ground.

In the future, Powerset also hopes to sell interactive advertisements with its search services. Lurking behind the news of its search service, is the rumor that the company is up for sale – and Microsoft may have $100 million worth of interest, according to widespread reports.