Microsoft agrees to extend Yahoo revenue-per-search deal

Microsoft agrees to extend Yahoo revenue-per-search deal

Summary: Microsoft and Yahoo are extending the revenue-per-search guarantee piece of their search partnership by another year.

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TOPICS: Microsoft, Google
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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.

yahoosearch

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.

Topics: Microsoft, Google

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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6 comments
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  • Yahoo outsourced search to MSFT back in 2009

    for all intents and purposes. More details on that here: http://www.zdnet.com/blog/microsoft/microsoft-and-yahoo-still-a-few-surprises/3556

    MJ
    Mary Jo Foley
    • i thought Yahoo mayers is not happy with the deal.

      i thought Yahoo mayers is not happy with the deal. i think i saw that in ZDNET itself.
      Mac_Win
      • Mayer's take on the deal

        Mentioned in the last paragraph of my post above. MJ
        Mary Jo Foley
  • WSJ says Yahoo is trapped in the deal

    It sounds like Marisa needs a Charles Ramsay to kick down the door and let her out.
    I2k4
  • Yahoo has no other viable option, and so, they're stuck with Bing,

    and with Microsoft.

    Going with Google would mean, basically, a monopoly in search for Google.

    Yahoo's problem is that, they're not attracting enough traffic to their sites in order for people to use their search box. Yahoo's properties aren't getting the job done for Yahoo or for Microsoft.

    Google doesn't need to help Yahoo, and if Yahoo were to drop Bing, then Google could just sit back and wait for the Yahoo search users go towards Google. Google wouldn't have to share revenue with Yahoo, since they could easily take it all with no Yahoo around.

    The only options for Yahoo is to either stay the course with Bing, or to sell whatever it has to Microsoft and others, where Microsoft would end up with most of Yahoo's search traffic.

    Bing is not producing enough for Microsoft, and it might even be a drain to MS, but part of that is because of the payments and commitment it made to Yahoo.

    Yahoo is a dead company walking. ;)
    adornoe
    • Happens to EVERY MS partner when they have something MS wants.

      Now than Yahoo doesn't have the staff that did search, they are dead unless they can get away from MS.
      jessepollard