Microsoft, Yahoo renew search deal, but with amendments

The companies said Thursday that they plan to carry out the original 2009 search agreement, but with two key changes designed to make the partnership more productive.

It looks like the Microsoft and Yahoo search partnership will stay intact.

The companies said Thursday that they plan to carry out the original 2009 search agreement, but with the addition of two key amendments designed to make the partnership more productive.

Going forward, Yahoo will serve Bing ads and search results for only a majority of its desktop search traffic -- not the 100 percent mandated previously. This means Yahoo will have the flexibility to alter the search experience on any platform, since the partnership is non-exclusive for both desktop and mobile.

Additionally, the companies plan to integrate sales relationships to become more effective at servicing advertisers. Microsoft will become the exclusive sales driver for ads delivered by Microsoft's Bing Ads platform, while Yahoo will continue to be the exclusive sales force for Yahoo's Gemini ads platform. The transition is expected to happen this summer.

Executives for both companies issued statements commending the renewed agreement, shifting the focus to future innovation.

"Our global partnership with Yahoo has benefited our shared customers over the past five years and I look forward to building on what we've already accomplished together," said Satya Nadella, Microsoft CEO.

"Over the past few months, Satya and I have worked closely together to establish a revised search agreement that allows us to enhance our user experience and innovate more in our search business," added Yahoo CEO Marissa Mayer. "This renewed agreement opens up significant opportunities in our partnership that I'm very excited to explore."

As for the original agreement, it dates back to 2009 when Microsoft and Yahoo signed a 10-year deal after Microsoft decided against buying Yahoo for $45 billion. Under the terms of the deal, Microsoft agreed to power Yahoo search, while Yahoo agreed to become the ad sales force for Microsoft's premium properties.

But the deal included an escape clause for Yahoo once the partnership reached the five-year mark, which was February 2015. At that time, Yahoo could decide to back out if its 12-month average revenue-per-search (RPS) in the US was less than a determined percentage of Google's RPS. Microsoft started compensating Yahoo for the RPS shortcomings in recent years.

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