Microsoft, Yahoo finalize search deal

Microsoft and Yahoo finally announced a long-rumored search and advertising agreement the companies say will combine their complementary strengths and platforms, fusing their respective search marketplaces in an attempt to topple segment leader Google. Per terms of the 10-year deal, Microsoft will now power Yahoo search efforts, and Yahoo will take over as the exclusive worldwide relationship sales force for both firms' premium search advertisers. Microsoft and Yahoo promise the partnership will offer users more efficient and relevant search results, while delivering better results for advertisers and publishers; Microsoft will compensate Yahoo through a revenue sharing agreement on traffic generated on Yahoo's network of both owned-and-operated and affiliate sites, and will pay traffic acquisition costs to Yahoo at an initial rate of 88 percent of search revenue generated on Yahoo's O&O sites during the first five years of the agreement.

According to Microsoft CEO Steve Ballmer, the deal provides the software giant's fledgling Bing search engine the scale necessary to more effectively compete against Google. Yahoo CEO Carol Bartz adds the deal promises to help increase her company's investments in priority areas like display advertising and mobile experiences. Each company will maintain its own separate display advertising business and sales force--moreover, the agreement does not cover each company's web properties and products, email, instant messaging, display advertising, or any other aspect of their respective businesses.

For more on the Microsoft/Yahoo deal:
- read this release

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