14 DAY TRIAL // Microsoft has announced that it has partnered with Yahoo in order to create a stronger no. 2 on the search engine market to go against Google. Through the marriage, after over a year and a half of off-again on-again speculation and failed negotiations, Microsoft and Yahoo have combined their search engine and online advertising businesses in order to close the gap separating both companies from Google. Under the agreement, Microsoft's Bing search engine will power Yahoo search on all Yahoo sites. At the same time, Yahoo will take on the role of exclusive worldwide relationship sales force for itself and for Microsoft, and will deal directly with both of the companies’ premium search advertisers.
CEO Carol Bartz stated earlier this year that it would take Microsoft boatloads of money to get Yahoo. While there is no money upfront, according to the financial terms of the agreement disclosed, Bartz still managed to get her wish. The Yahoo CEO indicates that the partnership with Microsoft brings to the table “boatloads of value” for Yahoo, for its users, and for the industry. As far as Yahoo is concerned, the company is expecting its annual operating income to get a boost of approximately $500 million. Current estimates reveal that Yahoo expects expenditure savings of about $200 million, with a forecasted $275 million extra to annual operating cash flow.
“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,” revealed Steve Ballmer, Microsoft chief executive officer. “Success in search requires both innovation and scale. With our new Bing search platform, we’ve created breakthrough innovation and features. 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.”
Microsoft and Yahoo promised that the deal was designed to offer an evolved web search experience to benefit not only end users but also advertisers. At the same time, the Redmond company noted that the partnership would ensure sustained innovation to the industry. Neither Microsoft nor Yahoo have made it a secret that they would flex their combined search engine muscles to go against Google.