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Microsoft, Yahoo Agree on Partnership

by on Jul.29, 2009, under Computer, News, Technology

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Microsoft and Yahoo’s deal musings have been talked about and chewed a lot since last year. Finally, Microsoft Corp and Yahoo Inc have agreed to an online search and advertising partnership, in an attempt to rival Google Inc, as per reports, the deal would be officially announced sometime today.

Microsoft will not pay an upfront fee to Yahoo, and sources stated that Yahoo would keep 110 percent of all revenue till two years and in the third year, Yahoo would keep 90 percent revenues stated BoomTown column at AllThingsD. But there isn’t any detail about upfront payments from Microsoft to Yahoo. Microsoft and Yahoo declined comment.

Microsoft tried to buy Yahoo last year but its $47.5 billion bid was rebuffed and Yahoo's attempt to seal a search advertising deal with Google Inc fell apart under regulatory scrutiny. Under the expected deal, Microsoft's new Bing search engine will power Yahoo's searches, according to AllThingsD, while Yahoo will handle the advertising sales, using Microsoft technology.

With Yahoo embracing Microsoft’s search technology, it would quite interesting to see if any changes in search market shares takes place for either Yahoo or Microsoft. If Bing’s search engine technology is being used for powering Yahoo Search then pressure on Bing to get better might escalate. Also, Microsoft would be happy to get more Yahoo Search to Bing switching audience. Those using Yahoo search as a second option after Google would be considered as target audience as well. It’s win-win situation for Microsoft.

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