14 DAY TRIAL // It's official, the two Internet giants have come to an agreement. After years of talks Microsoft and Yahoo managed to reach an understanding under which Bing will become the sole search provider for Yahoo. Most of the details previously speculated have been confirmed and the deal will most likely shape the Internet for the coming years. Yahoo has been trying to get out of the search business for a while now and new CEO Carol Bartz made it one of her priorities so it's no surprise she is pleased with the development.
“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,” Bartz said. “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. 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.”
Most of the details were already known but there is some new information as well. The deal is set for a 10-year period and during this time Microsoft will get access to all of Yahoo's web search technologies. Bing will become the exclusive search engine for Yahoo but it looks like the Sunnyvale, Calif. Internet giant will be able to brand its searches even though the underlying technology will come from Microsoft.
Yahoo on the other hand will handle all of the advertising sales for both companies, including the ads on Bing, but the ads will be served using Microsoft's AdCenter platform and will be priced by the platform’s automated auction system. Display advertising will be handled separately by the two companies and is not part of this deal.
As expected, there will be no upfront payment for Yahoo and the two companies will share the revenue from the advertising sales on Yahoo properties and affiliated sites with Microsoft ceding 88 percent of the advertising revenue for the first five years. Yahoo expects to get about $500 million in operating income yearly when the deal is in full effect.