Mobile // Mobile Applications
News
2/18/2010
12:43 PM
50%
50%

Microsoft-Yahoo Deal Gets Green Light

Companies say it's now just a matter of days before they implement their wide-ranging search alliance.

Antitrust regulators in the U.S. and Europe gave thumbs up to Microsoft's search alliance with Yahoo, paving the way for the companies to fully implement the agreement.

The U.S. Department of Justice and the European Commission both approved the deal without restrictions, Microsoft said Thursday. As a result, Microsoft and Yahoo said they will put many of the deal's features into practice within days.

"Although we are just at the beginning of this process, we have reached an exciting milestone," said Microsoft CEO Steve Ballmer, in a statement. "I believe that together, Microsoft and Yahoo will promote more choice, better value and greater innovation to our customers as well as to advertisers and publishers," said Ballmer.

The most notable part of the pact will see Yahoo effectively outsource search on its Web sites to Microsoft's Bing search engine. Still, Yahoo officials insisted their company isn't abandoning search for good and will continue to invest in the technology.

"This breakthrough alliance means Yahoo can focus even more on our innovative search experience," said Yahoo CEO Carol Bartz, in a statement.

"Yahoo gets to do what we do best: combine our science and technology with compelling content to build personally relevant online experiences to our users and customers," said Bartz.

Microsoft and Yahoo unveiled their wide ranging search alliance on July 29, 2009 following months of on-again, off-again negotiations. The pact calls for Microsoft's Bing technology to power queries on all of Yahoo's Web properties, while Yahoo assumes broad sales responsibilities for its own, and Microsoft's, Internet platforms.

Microsoft's AdCenter software will serve as a self-service search advertising tool for both companies.

The deal does not extend to Internet display advertising. Yahoo, meanwhile, will continue to "own" the overall user experience on its search pages, though Bing will carry out the actual queries.

Microsoft will compensate Yahoo for traffic from Yahoo's sites under a revenue sharing formula under which Yahoo will retain 88% of the search revenue generated on its pages for the first five years of the deal.

Yahoo has said it expects the arrangement to add $500 million to annual operating income and $275 million to cash flow while cutting capital expenses by $200 million.

Investors shrugged off the news, as shares of Microsoft and Yahoo were flat in early trading Thursday.

Download the Feb. 15 issue of InformationWeek, with our cover story on virtualization management. Get it here. (Registration required.)

Comment  | 
Print  | 
More Insights
Building A Mobile Business Mindset
Building A Mobile Business Mindset
Among 688 respondents, 46% have deployed mobile apps, with an additional 24% planning to in the next year. Soon all apps will look like mobile apps and it's past time for those with no plans to get cracking.
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Tech Digest, Dec. 9, 2014
Apps will make or break the tablet as a work device, but don't shortchange critical factors related to hardware, security, peripherals, and integration.
Video
Slideshows
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
Join us for a roundup of the top stories on InformationWeek.com for the week of December 14, 2014. Be here for the show and for the incredible Friday Afternoon Conversation that runs beside the program.
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.