Yahoo and Microsoft come to an agreement

July 29, 2009

(ChattahBox) — The rumors earlier today were true. Microsoft and Yahoo announced this morning that they are joining forces in a 10-year partnership that will combine their search and advertising resources in hopes of better competing with Google.  The firms said in a statement: “Providing a viable alternative to advertisers, 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% of all search.”

The companies have been in a drawn-out negotiation process for months about a partnership after a failed attempt by Microsoft to acquire Sunnyvale, Calif.-based Yahoo last year.  The funny thing is with the terms of this deal it seems like Microsoft got everything it wanted without having to go through the bother of acquiring Yahoo.  The arrangement will immediately propel Microsoft’s search engine into a major player in the mobile search market.

Under the terms of the arrangement, Microsoft’s new search engine, Bing, will be the exclusive search tool for Yahoo’s sites. The companies will also combine their advertising sales forces, with the Yahoo salesforce working with both companies’ premium search advertisers. Together they would have about 30 percent of the search advertising market compared with Google’s grasp of 60 percent of all online search advertisements.

Microsoft will pay for traffic acquisition costs of search revenue generated on Yahoo sites for the first five years. Yahoo said the deal will boost its annual operating profit by around $500 million within two years. Yahoo also estimates that this agreement will provide a benefit to annual operating cash flow of approximately $275 million.  Additionally, Microsoft will guarantee Yahoo!’s search revenue for the first 18 months after the deal is approved, Yahoo! said.   The companies said they are “hopeful” the deal can close in early 2010 after a regulatory review.


Comments

2 Responses to “Yahoo and Microsoft come to an agreement”

  1. runescape gold on July 30th, 2009 4:54 am

    Well, Yahoo didn’t want to be acquired. This partnership will keep Yahoo independent for now. Who knows, they can develop new technologies and become a better, more profitable company and not rely on the web services.

  2. lace wigs on May 27th, 2010 2:16 am

    The companies said they are “hopeful” the deal can close in early 2010 after a regulatory review.

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