Just like Godzilla vs. Mothra in those old Japanese monster movies, an epic battle is brewing between the search engine behemoths.  Google (Nasdaq:GOOG) clearly dominates the search engine business with 89.4% of global traffic while Yahoo (Nasdaq:YHOO) only possesses 3.93%, placing it third in line after Microsoft’s (Nasdaq: MSFT) Bing , which takes second place by grabbing 4.37% of worldwide traffic.

Can Yahoo ever catch up to Google in the war for search engine dominance?  Well, the company’s most recent innovation, “Search Direct” appears to be a strong competitor to “Google Instant”, launched last year.  While this is a step in the right direction for Yahoo and it’s good to see the advance, it’s going to take much more than playing catch up for Yahoo to ever win against GOOGzilla.  With the obvious said, let’s take a look at “Search Direct.”

Search Direct is designed to bring up answers in real time as the question is typed into the search box.  It locates and highlights results beyond the hyperlink and has the ability to categorize queries related to trending news, local information, movies and television.

According to Shashi Seth, Yahoo’s senior vice president of search and marketplace, “With today’s launch, direct answers–not the search results page–is the primary focus. We are redefining the search process and prominently displaying direct answers where search decisions are being made.”

Yahoo’s technology beats out Google’s since it presents edited information beneath the search box instead of just a page full of links.  Interestingly, Yahoo’s search is built on Microsoft’s Bing although this isn’t readily known by the average consumer.

How are investors treating this innovation thus far?  If yesterday’s Yahoo stock reaction is any indication, there isn’t much excitement.  Shares of Yahoo fell $0.23 or 1.38% and remain below the 50-day simple moving average of $16.60 per share.  However, price remains solidly above its crucial 200-day average of $15.53.   Google, on the other hand, has continued its several day march higher, moving up almost 1% or $4.84 cents on the session.

It looks like traders are completely discounting the new search features from Yahoo.  They will really have to wow us next time to gain actual traction in the market.  Good luck!

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