Wednesday, July 29, 2009

Microsoft To Power Yahoo Search

In a major shift, Microsoft and Yahoo said this morning that the two companies are in a deal where Microsoft will take over the web search technology aspects of Yahoo, and Yahoo will take over paid search advertising relationships for Microsoft, essentially making Microsoft's Bing the search engine behind Yahoo's portal sites. In an early morning announcement, the two said that the move will provide an alternative to "one company that dominates more than 70 percent of all search"--an indirect reference to Microsoft and Yahoo competitor Google. Yahoo and Microsoft said the term of the agreement will be for 10 years, with Microsoft gaining a 10 year license to Yahoo's core search technologies. The ad sales relationship covers search advertisers, with Microsoft AdCenter handling self-service advertising; the two are not combining their display ad efforts. The two said that Microsoft will pay Yahoo through a revenue sharing agreement, equal to a rate of 88 percent of search revenue generated on Yahoo's sites during the first five years of the partnership.