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Microsoft, Yahoo Enter 10-year Search Deal

Talks between Yahoo! and Microsoft have lasted for years, and today we finally get to see the two companies enter into a special partnership.

Microsoft will power Yahoo! search while Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. With Microsoft managing search, Yahoo! will focus on the other parts of its business such as its portal and other web products.

The combination of both companies still isn't as big as Google, which dominates more than 70 percent of all search, but now Yahoo! and Microsoft feel that together they have a fighting chance in the market.

"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 Microsoft CEO Steve Ballmer. "Success in search requires both innovation and scale.  With our new Bing search platform, we’ve created breakthrough innovation and features.  This agreement with Yahoo! will provide the scale we need to deliver even more rapid advances in relevancy and usefulness.  Microsoft and Yahoo! know there’s so much more that search could be.  This agreement gives us the scale and resources to create the future of search."

Microsoft will gain access to Yahoo!'s search technologies and code and will be free to integrate it into Bing if it so wishes. In return, Microsoft will pay traffic acquisition costs to Yahoo! at an initial rate of 88 percent of search revenue generated on Yahoo!’s sites during the first 5 years of the agreement.

The deal between the Yahoo! and Microsoft only cover search and advertising, as the companies' web properties and products, email, instant messaging, and display advertising will remain separate.

“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! CEO 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. Advertisers will also benefit from scale and enjoy greater ease of use and efficiencies working with a single platform and sales team for premium advertisers. Finally, this deal will help us increase our investments in priority areas in winning audience properties, display advertising capabilities and mobile experiences.”

What do you think of this deal? Will the joint forces of these two giants be able to take on the even larger giant from Mountain View?

Marcus Yam
Marcus Yam served as Tom's Hardware News Director during 2008-2014. He entered tech media in the late 90s and fondly remembers the days when an overclocked Celeron 300A and Voodoo2 SLI comprised a gaming rig with the ultimate street cred.
  • mtyermom
    So Google and Yahoo want to make a deal and the FTC goes all batshit crazy... now Microsoft and Yahoo strike a deal and not a peep... ???
    Reply
  • MS should just stick with continuing to improve their OS.
    Reply
  • adamovera
    "The deal between the Yahoo! and Microsoft only cover search and advertising, as the companies' web properties and products, email, instant messaging, and display advertising will remain separate."

    Thank God! MS won't be able to fuck up my yahoo email that I've had for over a dozen years. Whew, relieved! (GMail just isn't the same)
    Reply
  • valcron
    Now I have not tried bing but honestly I don't see myself switching from Google.

    Until the day Google stops returning the results I need when I run a search I see no reason to. Add all of the bells and whistles you want but its the results and ease of use that matters to me.

    Reply
  • aft_lizard01
    mtyermomSo Google and Yahoo want to make a deal and the FTC goes all batshit crazy... now Microsoft and Yahoo strike a deal and not a peep... ???Well one would have created a company that had 90% of the ad services on the internet, the other only33% or so.

    You need to separate arms of a company and not sit there and think because a company like MS controls 90 of software that it would create a anti-trust issue by gaining market share against google which controls 66% of all searches.
    Reply
  • mtyermom
    aft_lizard01Well one would have created a company that had 90% of the ad services on the internet, the other only33% or so. You need to separate arms of a company and not sit there and think because a company like MS controls 90 of software that it would create a anti-trust issue by gaining market share against google which controls 66% of all searches.
    Excellent rebuttal, thank you.
    Reply
  • tntom
    I think Yahoo really got a good deal here. I've found Bing to give better results than Yahoo search. An if they are going to rely on Bing for 10 years it absolutely makes since that they would hand over their technology to Bing so they can fully benefit from the deal. I like this arrangement much better than Microsoft buying or merging Yahoo.
    Reply
  • freak77power
    Yahoo and Gmail suck especially GMail.
    Reply
  • gekko668
    While i'm not going to give up google but the partnership between yahoo and microsoft are going to benefit the consumers. I'm all for it and plus I got Firefox and several add-on to removed all of the pesky ads.
    Reply
  • jacobdrj
    Whether people want to admit it or not, Microsoft is playing the 'AMD' role with regards to Google right now. They are keeping Google honest, and forcing them to innovate. This puts Microsoft in a de facto position of influence in the search world at 33-'ish'%. Unlike Yahoo!, M$ seems determined to make inroads into this market, where Yahoo! seems to have been standing almost still since renovating Yahoo! mail.
    Reply