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Microsoft/Yahoo! finalise 10 year search deal

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29th Jul 2009
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The number two and three in web search join forces; Ballmer and Bartz confirm the terms of the decade-long agreement. Jon Wilcox reports.

The long-expected relationship between Microsoft and Yahoo! has today been confirmed by the respective CEOs of both companies, Steve Ballmer and Carol Bartz. The news marks the end of a tumultuous journey over the past 18 months, which originally saw extended acquisition talks take place between the two before recent discussions about a search partnership began.

The 10 year agreement between the corporations will see Yahoo! search powered by Microsoft’s Bing search engine, whilst the Sunnyvale-based company will become the exclusive sales force for premium advertising for both outfits.  In addition, Microsoft will gain the exclusive access to Yahoo!’s search technologies, which it intends to enhance the performance of Bing’s own technology.

A joint statement confirmed the agreement does not extend beyond search, and that in other areas including Instant Messaging and email, “the companies will continue to compete vigorously.”

“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,” explained Bartz. “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.”

Ballmer added, “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.”

The proposed Microsoft/Yahoo! search partnership still has to pass inspection from regulators, though the two companies hope the deal will be finalised within months.  Despite today's news, Google (referred to by Ballmer as the dominating 'single company') remains the dominant search provider with between 65% and 70% of traffic. Therefore even in the mid-term, it's unlikely to see a significant challenge for its crown. 
 
The reponse to today's news has proved interesting; on the Nasdaq, shares in Microsoft are up by a measly 0.21%, whereas Yahoo!'s share price has been a bit more dramatic, dropping by nearly 9.5% since the start of trading.

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