Updated: Microsoft seals Yahoo search deal

 

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By Stuart Turton

Posted on 29 Jul 2009 at 08:27

Microsoft and Yahoo have announced a search deal, aimed at "changing the search landscape."

The ten-year deal will see Microsoft's Bing put to work powering Yahoo's searches. In return, Yahoo will take over selling premium advertising for the two companies, with a revenue-sharing deal in place.

The financial details of the deal were not discussed, but Microsoft made no bones about the implications of the deal.

"Through this agreement with Yahoo, we will create more innovation in search, better value for advertisers, and real consumer choice in a market currently dominated by a single company," says Microsoft CEO Steve Ballmer.

"Success in search requires both innovation and scale. This agreement with Yahoo will provide the scale we need to deliver even more rapid advances in relevancy and usefulness," he concludes.

Microsoft tried to buy Yahoo for $44.6 billion back in February of last year but was rebuffed by former chief executive Jerry Yang. Since then Yang has been replaced by Carol Bartz, who has claimed that any partner looking to make a search deal would need "boat loads of money" and solid technology.

Bing seems to have taken care of the technology side, which just leaves money. When reports of the deal first surfaced it was claimed Microsoft would offer Yahoo a $3 billion sweetener, however, the companies have made no mention of money being exchanged up front.

Analysts have warned that a merger of the second and third-ranked search engines could still be blocked by antitrust regulators. Indeed, Google and Yahoo were forced to drop plans for an advertising partnership last year under opposition from the US Department of Justice.

"Any agreement where Microsoft powers search and shares the search data to Yahoo is open to scrutiny from US and EU justice departments," notes Colin Gillis, an analyst at Brigantine Advisors.