Massive value for Yahoo
Under a no-cash deal, Yahoo will use Microsoft’s new Bing search engine on its own sites, while Yahoo will act as the exclusive global sales force for the companies’ premium search advertisers.
The Sunnyvale, California, company also estimated the deal would provide it with a $275m benefit to annual operating cash flow.
“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,” Yahoo chief executive Carol Bartz said in a statement.
Yahoo and Microsoft reached agreement on Wednesday on a long-awaited web search partnership that would unite the two companies against market leader Google.
The agreement, which has a 10-year term, will be subject to review by US regulatory authorities, the companies said.
It is restricted to internet search and related advertising revenue, while the pair would retain full autonomy on other properties and products such as email, instant messaging and display advertising.
The partnership, Microsoft said, “will improve the web search experience for users and advertisers, and deliver sustained innovation to the industry”.
Microsoft chief executive Steve Ballmer said the deal will enable Bing to better compete against Google, as well as attract more users and advertisers.
“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,” Ballmer said.
“This agreement gives us the scale and resources to create the future of search.”
Calling the link-up a “significant opportunity” Yahoo chairperson Roy Bostock said the company’s board backed it with its “full and unanimous support”.
“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,” he said.
According to research firm Comscore, Google has a 65% share of the lucrative search market, followed by Yahoo! with 19.6% and Microsoft with 8.4%.
Microsoft Yahoo deal – give your views
Loading ...