Microsoft and Yahoo finally got in the search business bed together, Microsoft will power Yahoo search while Yahoo also becomes the sales force for Microsoft's premium properties. Yahoo will continue to provide online destinations and web products.
Micrsoft's Steve Ballmer noted that the deal gives Bing the scale to compete.
The deal must be approved by regulators to go through.
We received a link to news release here are the details:
For Web users and advertisers, this deal will accelerate the pace
and breadth of innovation by combining both companies' complementary
strengths and search platforms into a market competitor with the scale
to fuel sustained development in search and search advertising. Users
will find what they care about faster and with more personal relevance.
Microsoft's competitive search platforms will lead to more value for
advertisers, better results for web publishers, and increased
innovation and efficiency across the Internet.
Under this
agreement, Yahoo! will focus on its core business of providing
consumers with great experiences with the world's favorite online
destinations and Web products.
"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! CEO Carol Bartz. "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."
Providing a viable alternative to
advertisers, this deal will combine Yahoo! and Microsoft search
marketplaces so that advertisers no longer have to rely on one company
that dominates more than 70 percent of all search. With the addition of
Yahoo!'s search volume, Microsoft will achieve the size and scale
required to unleash competition and innovation in the market, for
consumers as well as advertisers.
Microsoft CEO Steve
Ballmer said the agreement will provide Microsoft's search engine,
Bing, the scale necessary to more effectively compete, attracting more
users and advertisers, which in turn will lead to more relevant ads and
search results.
"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," said Ballmer. "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."
"This deal fits the long-term strategic
direction of Yahoo! to remain the world's leading online media company
and Carol Bartz has the full and unanimous support of the Yahoo! Board
behind this deal," said Roy Bostock, chairman, Yahoo! Inc. "This is a
significant opportunity for us. Microsoft is an industry innovator in
search, and it is a great opportunity for us to focus our investments
in other areas critical to our future."
The key terms of the agreement are as follows:
-
The term of the agreement is 10 years;
-
Microsoft
will acquire an exclusive 10 year license to Yahoo!'s core search
technologies, and Microsoft will have the ability to integrate Yahoo!
search technologies into its existing web search platforms; -
Microsoft's
Bing will be the exclusive algorithmic search and paid search platform
for Yahoo! sites. Yahoo! will continue to use its technology and data
in other areas of its business such as enhancing display advertising
technology. -
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, and prices for all search
ads will continue to be set by AdCenter's automated auction process. -
Each company will maintain its own separate display advertising business and sales force.
-
Yahoo!
will innovate and "own" the user experience on Yahoo! properties,
including the user experience for search, even though it will be
powered by Microsoft technology. -
Microsoft
will compensate Yahoo! through a revenue sharing agreement on traffic
generated on Yahoo!'s network of both owned and operated (O&O) and
affiliate sites. -
Microsoft
will pay traffic acquisition costs (TAC) to Yahoo! at an initial rate
of 88% of search revenue generated on Yahoo!'s O&O sites during the
first 5 years of the agreement. -
Yahoo! will continue to syndicate its existing search affiliate partnerships.
-
Microsoft
will guarantee Yahoo!'s O&O revenue per search (RPS) in each
country for the first 18 months following initial implementation in
that country. -
At full implementation
(expected to occur within 24 months following regulatory approval),
Yahoo! estimates, based on current levels of revenue and current
operating expenses, that this agreement will provide a benefit to
annual GAAP operating income of approximately $500 million and capital
expenditure savings of approximately $200 million. Yahoo! also
estimates that this agreement will provide a benefit to annual
operating cash flow of approximately $275 million. -
The
agreement protects consumer privacy by limiting the data shared between
the companies to the minimum necessary to operate and improve the
combined search platform, and restricts the use of search data shared
between the companies. The agreement maintains the industry-leading
privacy practices that each company follows today.