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July 29, 2009

It's Official: Microsoft and Yahoo! Finally Strike Search Deal

Don't adjust your screen folks, it's finally official. Microsoft and Yahoo! have finally struck a search deal. No, Microsoft will not be acquiring all of Yahoo! No, Yahoo! will not be slicing off search and selling it off to Microsoft.

Under the 10 year agreement, Bing will power Yahoo! search, creating a Google competitor that last month reached a combined 28.4% of the search market share, according to comScore. Microsoft will also be able to integrate Yahoo! search technologies into its web search platform.

Meanwhile, Yahoo! will sell the search advertising for the newly combined entities. AdCenter will be the self-service search ad platform. This will take a long time to implement as they adjust relationships with thousands of advertisers.

Display advertising will not be affected by the deal. Both companies will maintain their programs separately.

Microsoft will pay Yahoo! 88% of search ad revenues generated by Yahoo! sites. Yahoo! expects to see $275 million operating cash flow as a result of the deal.

"This agreement comes with boatloads of value for Yahoo!, our users, and the industry, and I believe it establishes the foundation for a new era of Internet innovation and development," said Yahoo! Chief Executive Officer Carol Bartz.

Yahoo! will now focus primarily on their media sites, many of which are #1 in their categories. Sites like Yahoo! Finance and Yahoo! Sports are very popular and bring in millions of unique visitors per month.

"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," continued 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. Finally, this deal will help us increase our investments in priority areas in winning audience properties, display advertising capabilities and mobile experiences."

For its part, Microsoft is finally getting what it wants: an increased search market share to take on rival Google. Microsoft CEO Steve Ballmer hopes that combining the resources of the #2 and #3 search engines will help innovation, which he says is needed to steal share from Google.

"With our new Bing search platform, we've created breakthrough innovation and features," said Ballmer. This agreement with Yahoo! will provide the scale we need to deliver even more rapid advances in relevancy and usefulness. Microsoft and Yahoo! know there's so much more that search could be. This agreement gives us the scale and resources to create the future of search."

Antitrust issues will likely rear their ugly head, with Microsoft poised to seek the blessing of the DOJ. Expect Google to lobby against the deal, but keep in mind that Christine Varney, Assistant AG at DOJ Antitrust is on record saying she wants to go after Google for antitrust issues. She has also said that Microsoft antitrust issues are, like, so 1990s.

Alright, SEW readers, time to unleash your initial reaction to this deal. That's what the comments section below is for. What do you think of this deal? Will they be able to take on Google? Do you want to use AdCenter to for search ads on Yahoo!? Let us know!

Posted by Nathania Johnson on July 29, 2009 7:45 AM

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Comments

Finally. I'm not convinced they can upend Google, but at least we can combine Yahoo's traffic with adCenter's superior PPC management tools and community relations (which are excellent, vs. Yahoo's virtually non-existent community interaction). It will take time, but this is definitely a win for advertisers.

Mel66  July 29, 2009 8:31 AM

Agree with your points Mel66, but won't the MS community relations go out of the window if Yahoo are doing all the selling?

Jonathan Beeston  July 29, 2009 8:46 AM

Sorry to say, it should read "For Web users and advertisers, this deal will accelerate the pace and breadth of innovation by combining both companies’ suckiness and make one bigger and suckier search platforms"

They are still missing the fundamentals. What specifically are they, what are their long term goals, and how will they be different and better than Google? Without those answers, I believe, they will always be chasing the leader not becoming the leader.

Al Scillitani  July 29, 2009 9:04 AM

This is a deal? For what? Something that Google invented and perfected. 10 years from now, knowing the natue of online advertising, I am betting that Google will have created something new that once again, Microsoft didnt think about, and will be again way ahead in the race. Wonder which company Microsoft will buy then. lol

Lisa  July 29, 2009 9:14 AM

Interesting comments. I still say it's better to deal with one than with both. And I'm not sure that adCenter won't continue to service most PPC advertisers - it says "Yahoo! will become the exclusive worldwide relationship sales force for both companies' premium search advertisers. Self-serve advertising for both companies will be fulfilled by Microsoft's AdCenter platform." I'm not sure how "premium" is defined, but my guess is that a lot of us don't qualify for that status. :)

Mel66  July 29, 2009 9:24 AM

has anyone seen any discussion around what this will do for Yahoo Site Explorer data as well as Search Submit Pro (Paid Inclusion)?

Chris  July 29, 2009 9:35 AM

Will the new partnership be able to take google's throne - probably not. Time will tell but reports should also keep a close eye on how companies modify their SEO and PPC efforts moving forward.

http://domusinc.blogspot.com/2009/07/microsoft-yahoo-deal-work-for-us-to-do.html

Jack  July 29, 2009 11:00 AM

"Christine Varney, Assistant AG at DOJ Antitrust is on record saying she wants to go after Google for antitrust issues. She has also said that Microsoft antitrust issues are, like, so 1990s." So Microsoft owns two search engines and a portal they call "Bing" and that's not a concern to MS.Varney? Microsoft MSN, Live, Bing and now Yahoo!? Hmmm something stinks to high heaven

Anonymous  July 29, 2009 11:15 AM

Wow! Finally Microsoft has reached a deal Yahoo for an internet search partnership. Will the newly announced deal between giants Microsoft and Yahoo be a good thing? Got to wait and see. But atleast Microsoft and Yahoo deal is straightforward and not complex at all and ofcourse, the negotiation talks have been going for long. I was just curious to know all the past negotiations between Microsoft and Yahoo so collected all the articles and links (more than 200) related to the current merger and the previous events or negotiations between Microsoft and Yahoo. If you are interested check the link below.
http://markthispage.blogspot.com/2009/07/saga-of-microsoft-and-yahoo-from-2007.html

sri  July 29, 2009 12:30 PM

What happened to boatloads of money? It is really difficult for me to spend boatloads of value. There should have been some upfront payment to placate wall street and the investors (including myself). Also I thought we were supposed to see 500 million in income...now it's 200 million? Terrible deal for shareholders and the company as a whole.

Anonymous  July 29, 2009 4:11 PM

Someone warned me today not to under estimate Microsoft. Bing was launched with this take over in mind, Microsoft won the first round of browser wars.

Nothing is going to change tommorow. But my question is should we all stop working on the Yahoo API, and wait for the replacement MICROYOO.

What happens to all the other services Yahoo offers, more importantly who gets to keep there job.

Searchengineman  July 29, 2009 4:19 PM

This agreement would definitely provide a much needed momentum to Bing in terms of traffic as large scale traffic is mandatory in order to learn what people search for. Its tough to say for now that whether this move would eat away Google’s market share but without doubt this will be good for consumers as competition is always healthy

Krishna Santani  July 29, 2009 4:44 PM

This agreement is exactly what Bing needs to keep the momentum going, although I am skeptical on how much this will truly change the world of search.

Rebecca Gill  July 29, 2009 4:54 PM

The question I have is what is to become of Yahoo’s paid inclusion program, Search Submit Pro. Will it get incorporated into Bing.com's organic SERPs and continue to affect the Yahoo's Bing-fed "organic" search results? Or will they decommission this product altogether and return Yahoo's “organic” results to being truly "organic"?

Jason Campbell  July 29, 2009 6:00 PM

Well I kinda like Bing, and I'd rather manage 1 account than 2, so I'm kinda liking this turn of events, but I don't think they'll be able to mount a meaningful attack on Google. And I'm not buying the line that they represent 30% of the search market for one second. I never did. I have much better rankings on Yahoo and Bing than I do on Google, and combined they bring in less than 20% of my traffic. They have a LONG way to go to consider themselves contenders in the search market. Still, Google's anti-trust concerns are comically hypocritical, they are also legitimate. MS/yahoo has a better chance challenging Google Search than Google has of challenging MS with Chrome OS.

And, with Google out of the way, MS will have pretty much achieved...

GLOBAL DOMINATION!

MUAH HA HA HA HA HA HA!

Ken Marshall  July 29, 2009 6:02 PM

Wow I thought Bing was going to fizzle....still dont like it over Google tho..

THomas Crown  July 30, 2009 1:58 PM

I agree that this will make it easier to manage search campaigns but I also agree that MSN and Yahoo have much work to do on their PPC campaign interface. Google's is much more intuitive and expanding every day, making it a cinch for PPC novices to dive right in. This would be a good opportunity to develop a UI that rivals Google's, thereby opening the door to more advertisers.

One other point: In my experience, MSN has historically driven less PPC traffic but greater conversion percentages than Yahoo, yielding superior ROI. Will merging the two technologies dilute MSN's conversion advantage and offer greater reach at the cost of diminished effectiveness? Has anyone else experienced similar disparities in conversion between the two?

shusong  July 30, 2009 2:55 PM

I agree that this will make it easier to manage search campaigns but I also agree that MSN and Yahoo have much work to do on their PPC campaign interface. Google's is much more intuitive and expanding every day, making it a cinch for PPC novices to dive right in. This would be a good

Replica Christian Loutoutin  August 17, 2009 12:14 AM

For its part, Microsoft is finally getting what it wants: an increased search market share to take on rival Google. Microsoft CEO Steve Ballmer hopes that combining the resources of the #2 and #3 search engines will help innovation, which he says is needed to steal share from Google.

Christian Louboutin Sale  October 14, 2009 3:24 AM

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