Microsoft! and! Yahoo! finally! sign! search! deal!

Thank! god! for! that!

By John Oates • Get more from this author

Posted in Music and Media, 29th July 2009 12:42 GMT

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It's all over - Microsoft and Yahoo! have finally signed a search deal which means the end of Yahoo!'s long-developed independent search engine.

The 10-year agreement means Yahoo! will use Microsoft's search technology and in exchange will sell both its own and Microsoft's search ads. Both companies will keep display ads sales teams. A ten year deal? That's an awfully long time on the internet...

Microsoft will pay Yahoo! for traffic acquisition from its owned and operated sites. Microsoft will initially pay Yahoo! 88 per cent of search revenue generated on Yahoo! sites for the first five years. This revenue will be guaranteed by Microsoft for the first 18 months of launch in each country. Self-serve advertising will all shift to Microsoft's AdCenter platform.

Yahoo! expects this to contribute $500m to GAAP operating income when fully implemented.

The release promises that data sharing between the two will be limited "to the minimum necessary to operate and improve the combined search platform".

The release obviously doesn't mention Google. But it does bizarrely include a line which shows both the strength and the weakness of the deal.

The statement says: "This deal will combine Yahoo! and Microsoft search marketplaces so that advertisers no longer have to rely on one company that dominates more than 70 percent of all search."

Steve Ballmer said the deal would give Bing the scale of users and advertisers to allow it to compete effectively.

Carol Bartz, CEO of Yahoo!, said the deal would "help us increase our investments in priority areas in winning audience properties, display advertising capabilities, and mobile experiences”.

The deal will need regulator approval, and the firms hope to close it early next year.

The joint statement is here. Let us know your thoughts below. ®

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