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Yahoo!, Microsoft Parley against Google

It's official: Yahoo and Microsoft have announced Wednesday, July 29, a pack that will last for 10 years. Under the deal, Microsoft will power yahoo search. In turn, Yahoo will act like a sale force for Microsoft's premium properties.

Yahoo CEO Carol Bartz was quoted as saying that the deal will add "boatloads of values for users and the industry." Industry experts believe the deal will trigger innovation and bring more value to advertisers and web users.

Microsoft's CEO Steve Ballmer also believes the deal gives Bing the chance to compete with Google search. In a blog post, Bartz is quoted as saying: "You'll find search boxes all across Yahoo!, but this deal will make the difference between a great Yahoo search experience and an awesome one."

Google commands 70% of the search market. With this deal, Yahoo and Microsoft would be able to compete with Google in search. It's expected that the deal will fully end anytime right to 2010. Three to six months after the deal closes, Yahoo is expected to transition to Bing search. Other migration will be from panama ad system to Microsoft's Adcenter, which will trigger in 12 months time, after the close of the deal.

Below are the key details of the deal as stated in the joint website.

  • The deal is for 10 years.
  • Microsoft will license Yahoo's core search technologies for 10 years.
  • Bing is the 'exclusive algorithmic search and paid search platform for Yahoo sites'.
  • Yahoo is the worldwide sales force for both companies. Self-serve and search advertising will be built on Microsoft's AdCenter platform.
  • Yahoo will own the user experience on its properties
  • .
  • Microsoft will pay traffic acquisition costs to Yahoo at a rate of 88 percent of search revenue on Yahoo sites for the first five years. Yahoo will continue its search affiliate partnerships. On a conference call, Ballmer said: "We paid a high TAC rate. There is no question." He added that the upside comes as Microsoft improves relevance due to more scale. "Our upside comes as execution really builds," he said.
  • "Some Yahoo engineers may move to Microsoft," said Ballmer.
  • Microsoft guarantees Yahoo's owned and operated revenue per search in each country for 18 months.
  • After 5 years, Microsoft can retake premium ad sales back from Yahoo.
  • The implementation will occur within 2 years after regulatory approval.

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