Microsoft, Yahoo Finally Team Up
The deal between Microsoft and Yahoo has finally been inked – though not for a complete merger of the two. The two giants will be working together only in the internet search market, with the partnership accounting for a third of the pie.
According to a report by Freaking News, the long courtship and duel between Microsoft and Yahoo has come to a happy conclusion. It saw the ouster of Yahoo’s CEO, Microsoft’s launch of a new search engine and of course, the latter’s abortive but hostile attempt to take over Yahoo.
Despite all of these setbacks, the two have finally managed to find common ground and have signed an advertising deal. The initial agreement is for 24 months with an in-principle understanding of 10 years. Under the new agreement, Yahoo’s search feature will now be powered by Microsoft’s Bing, while Yahoo will use Microsoft’s AdCenter Platform to sell internet advertisements.
The combination will give Microsoft / Yahoo an internet search market share of just over 28%, with a revenue increase of more than $500 million expected. This is still less than half of the 65% market share held by Google. Microsoft has managed to gain the upper hand in this deal as it will reportedly not be paying anything upfront to Yahoo despite the latter currently having a higher standing; the partnership is one of equal revenue sharing.
The deal is expected to yield premiums for both companies that have been fighting to find a foothold against the Google behemoth. While Microsoft has seen good growth with Bing, it has not managed to even dent Google’s position. Yahoo on the other hand has been steadily losing market share to both Google and Microsoft.
Even as the two web giants have come to an agreement, they are already in the sights of Google, the US Justice Department and the EU regarding possible antitrust policy violations. The next few months are going to be decisive for this fledgling partnership, but for now, they have started their tryst with destiny.