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Microsoft, Yahoo finally strike search deal

updated 08:50 am EDT, Wed July 29, 2009

MS Yahoo Search Deal

Microsoft and Yahoo today at last announced a partnership between the two companies for both ads and search. The 10-year deal will see Microsoft's Bing search engine replace Yahoo's own in most areas and will give the Windows developer a license to Yahoo's search technology to use for itself. In return, Yahoo will sell premium ads for both companies and will collect revenue from Microsoft for traffic sent its way during the first five years. Microsoft also vows to guarantee Yahoo's revenue for the first year and a half the new arrangements take effect in a given country. It should improve Yahoo's cash flow by about $275 million per year.

Both partners are adamant that they'll each have their own separate display ads and that one won't have control over the design of the other's websites. They also promise to keep data private and avoid exchanging it when possible.

Government regulators will look at the deal to prevent possible anti-competitive behavior but are expected by Microsoft and Yahoo to approve the deal by early 2010.

The agreement is pitched as improving the scale for both advertisers and for search but is openly admitted by the companies as ultimately meant to fight Google, which owns about 70 percent of search traffic in the US. Microsoft makes clear that it's the primary architect of the deal and that its ultimate goal is to "unleash competition" by creating a more significant competitor.

Last year, Microsoft had attempted a hostile takeover of Yahoo after months of unsuccessful offers. It was denied both after Yahoo insisted it was being undervalued and made a number of "poison pill" moves that rendered a deal difficult, including an abortive ad deal with Google and extremely rewarding severance packages that would have encouraged mass defections from Yahoo if Microsoft were to buy the firm. The attempt and today's deal are commonly known to stem from Microsoft chief Steve Ballmer's personal focus on undermining Google, which included mirroring the company's purchase of ad firm DoubleClick by its own purchase of aQuantive, the creation of Bing and building the now-defunct YouTube clone Soapbox.

Individually, Microsoft and Yahoo have struggled to gain any significant market share in ads or search in recent years. Bing has only been available for over one month and, while typically considered better than the previous Windows Live Search, has made relatively little progress of its own.

By Electronista Staff
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  1. Herod

    Fresh-Faced Recruit

    Joined: Jun 2007


    article should read...

    "Today, Yahoo Dies"...

  1. pairof9s

    Mac Enthusiast

    Joined: Jan 2008


    Best part was...

    This tidbit not included:

    According to Microsoft Chief Executive Steve Ballmer, the deal will allow Microsoft to "create more innovation in search, better value for advertisers and real consumer choice in a market currently dominated by a single company."

    You talk about the kettle calling the pot black!!

  1. testudo

    Forum Regular

    Joined: Aug 2001



    Yahoo died years ago, and has been getting progressively worse since.

  1. Mr. Strat

    Junior Member

    Joined: Jan 2002


    Yet another example

    So Microsoft can't develop a decent search engine on their they buy someone else's.

    This company is pathetic.

  1. trevc

    Fresh-Faced Recruit

    Joined: Mar 2000


    how many times...

    a friend listed off 31 companies that Microsoft 'got in bed with', and then royally screwed them and they've pretty much all are non existent.

    Obviously this means layoffs at yahoo, and since traffic won't be going to as much, yahoo will have less presense, which probably means slow death?

    Maybe the ex-yahoo staff can get a job at the new Microsoft stores...

  1. elroth

    Junior Member

    Joined: Jul 2006



    I guess I won't be using Yahoo search any more. Oh, wait - I've never used it anyway.

  1. coffeetime

    Mac Enthusiast

    Joined: Nov 2006


    strange strategy

    Don't know how that will increase the chance of beating Google. It seems a bit too late to join.

  1. Salty

    Professional Poster

    Joined: Jul 2005



    And this is the end for any already irrelevant company... just wish they didn't own Flickr

  1. byRyan

    Fresh-Faced Recruit

    Joined: Jun 2007



    SoapBox!?!?!?? has anyone even heard of this? wow - talk about a failed product - I didnt even know it exsisted.

  1. c4rlob

    Fresh-Faced Recruit

    Joined: May 2009


    Jerry Yang

    Jerry Yang is probably saying to himself - how did I let this happen to my baby?! Don't worry Jerry, it won't take long for Carol Bartz's strategy of focusing more on media/marketing distribution than data/search technology lands her out on the street.

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