Yahoo and Microsoft in Search Engine Pact

Jul 30, 2009

Yahoo and Microsoft yesterday announced plans of a joint venture to challenge the search engine giant Google. The plans include Yahoo search running on Microsoft's "Bing" technology. In return, Yahoo will handle service support for both companies' premium customers.

After lengthy negotiations and take-over speculation, the move will provide Yahoo and Microsoft with an estimated 30% chunk of the search engine market. Google currently holds the lions-share of 65%.

The deal involves Microsoft buying Yahoo's search technology for a 10 year period, but only to build it into Bing, which Yahoo will use exclusively as a platform for paid searches. A few Yahoo sites will keep its own in-house technology.

Yahoo will take on the sales force role for the two companies with both utilizing Microsoft's Adcenter Platform. Each company will keep its own sales teams and, apart from the search engine deal, will remain independent.

In the first five years, Microsoft will pay 88% of revenue from Yahoo websites, so-called "Traffic Acquisition Costs" and will guarantee search revenue for the first 18 months.

After an initial 2 year implementation phase, Yahoo expects a plus of $500 Million in operative revenue and a further 3 figure Million amount from savings in development.
Potential business partners can go to the joint website for further information, which at the moment, still looks pretty thin.

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