Microsoft-Yahoo Deal Gets Approval from Regulators in the US and EU

The preparation stage for the biggest deal in web-search history is over, Microsoft and Yahoo are free to do as they please with their search engines as far as US and EU regulators are concerned, as was expected. Both the US Department of Justice and the European Commission had given their approval of the search deal proposed last summer, Microsoft and Yahoo said in a joint-statement. The actual merger of the two search engines should be over, in the US, by the end of 2010.

“This breakthrough search alliance means Yahoo! can focus even more on our own innovative search experience,” Yahoo! Chief Executive Officer Carol Bartz said. “Yahoo! gets to do what we do best: combine our science and technology with compelling content to build personally relevant online experiences for our users and customers.”

The two major tech companies reached an agreement last summer, after more than two years of on-again, off-again talks. Under the deal, Yahoo outsources its search engine to Microsoft, meaning that Bing will serve all the results on Yahoo Search and any other Yahoo propriety. Yahoo gets to keep all the user-facing customizations, the look and layout of the search engine stays the same.

The bigger issue here isn't the search deal, but the advertising deal that comes attached. All the search advertising across both companies' ad networks will be unified. Yahoo will get to handle big-name clients and campaigners, as well as the ad sales to SEO or SEM companies, while the self-serve ad clients will be handled by Microsoft's existing ad network.

The government regulators saw no issues with the deal and don't believe it will hurt competition, even though it's effectively the merger of the number-two and number-three players in the search market. In fact, if anything, the deal should help competition, as it will give Microsoft a much better foothold in the market. With Bing and Yahoo Search put together coming in at less than a ten-percent market share while Google takes the remaining 90 percent in the EU, as the EC notes in its decision, the matter of anti-trust doesn't really come into play.