The search partnership proposed last July by Microsoft and Yahoo finally has gained regulatory clearance by both the U.S. Department of Justice and the European Comission, the companies announced February 18.
Implementation of the deal is “expected to begin in the coming days.” Yahoo’s algorithmic and paid-search platforms go to Microsoft, and Yahoo becomes the exclusive “relationship sales force” for both companies with premium search advertisers.
Microsoft and Yahoo came to terms last summer in order to create a more formidable No. 2 search player to compete with Google. Google has more than 65 percent of the U.S. search market, according to the latest numbers from comScore. Yahoo, which has been losing share, is at about 17 percent and Microsoft’s Bing has 11 or so percent, comScore said.
Google originally proposed a search partnership with Yahoo, but withdrew from that deal in 2008, not wanting to endure an anticipated lengthy and costly regulatory process.
It’s been a while since I looked again at the exact terms of the Microsoft-Yahoo proposed deal. A couple of interesting tidbits:
- It’s a 10-year deal
- Microsoft is expecting to lose $300 million during the first couple years of the partnership, as the various costs (integration, retention, R&D etc.) are assumed
- Yahoo got no up-front cash payment
- Yahoo’s Panama ad platform is replaced by Microsoft’s adCenter
- Some Yahoos are being moved to Microsoft as part of the transaction
More thoughts on new challenges now that the Microsoft-Yahoo deal’s gotten the OK from my ZDNet college Larry Dignan.
