Microsoft agrees to extend Yahoo revenue-per-search deal

Microsoft is going to continue to pay Yahoo a guarantee for the revenue-per-search (RPS) shortfall that is continuing to persist, three years after the pair cemented their search partnership.

Reuters noted that Yahoo disclosed the latest year-long extension of the guarantee, which had expired on March 31, on May 7. The guarantee took effect on April 1, according to Yahoo's latest 10-Q filing.

Search Engine Land recapped RPS this way:

"(W)hen Yahoo & Microsoft signed a search deal in 2009, Microsoft promised that Yahoo would earn a set amount of money for each search that happens, a 'revenue per search' or RPS. If this didn’t happen, Microsoft agreed to make up the difference, what’s called the RPS guarantee."

Microsoft hasn't hit the RPS targets since that time, resulting in Microsoft agreeing in late 2011 to extend the guarantee until this March.

Microsoft's AdCenter technology, the system for buying and delivering online ads, didn't end up providing the kind of revenues Yahoo anticipated when it forged its search deal with Microsoft. To make up for the shortfall, Microsoft has made quarterly payments to Yahoo.

Earlier this year, Yahoo's Marissa Mayer has said that the search partnership between the tech firm and Microsoft has not been as lucrative as expected, contributing to speculation that Yahoo might look to Google as a new search partner at some point.