Microsoft, Yahoo Reach Deal On Search Partnership

ConsumerAffairs.com

July 29, 2009
After a number of false starts, Microsoft and Yahoo! have announced an agreement to team up for an Internet search venture, aimed at cutting into Google's dominance.

Last year Microsoft attempted to purchase Yahoo! for $47.5 billion, but the offer was rejected as too low. Under the agreement announced Wednesday, Microsoft will provide search technology on Yahoo!'s sites.

"For Web users and advertisers, this deal will accelerate the pace and breadth of innovation by combining both companies' complementary strengths and search platforms into a market competitor with the scale to fuel sustained development in search and search advertising," Microsoft said in a statement. "Users will find what they care about faster and with more personal relevance. Microsoft's competitive search platforms will lead to more value for advertisers, better results for web publishers, and increased innovation and efficiency across the Internet."

Under the agreement, Yahoo! will focus on its core business of providing Internet search.

"This agreement comes with boatloads of value for Yahoo!, our users, and the industry. And I believe it establishes the foundation for a new era of Internet innovation and development," said Yahoo! Chief Executive Officer Carol Bartz. "Users will continue to experience search as a vital part of their Yahoo! experiences and will enjoy increased innovation thanks to the scale and resources this deal provides."

The two companies says the venture will provide a viable alternative to Google, which they say dominates more than 70 percent of all Internet search. Microsoft Chief Executive Officer Steve Ballmer said the agreement will provide Microsoft's search engine, Bing, the scale necessary to more effectively compete, attracting more users and advertisers, which in turn will lead to more relevant ads and search results.

"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," said Ballmer.

Under the terms of the 10-year deal, Microsoft will acquire an exclusive license to Yahoo!'s core search technologies, and Microsoft will have the ability to integrate Yahoo! search technologies into its existing web search platforms. Microsoft's Bing will be the exclusive algorithmic search and paid search platform for Yahoo! sites. Yahoo! will continue to use its technology and data in other areas of its business such as enhancing display advertising technology.

Each company will maintain its own separate display advertising business and sales force.

The agreement does not cover each company's web properties and products, email, instant messaging, display advertising, or any other aspect of the companies' businesses. In those areas, the companies will continue to compete vigorously.

The transaction is subject to regulatory review. The agreement entered into today anticipates that the parties will enter into more detailed definitive agreements prior to closing. Microsoft and Yahoo! said they expect the agreement to be closely reviewed by the industry and government regulators but ultimately close by early 2010.

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