Yahoo's Mayer fails in effort to end Microsoft search pact

Efforts to end a venture less successful than expected have failed, according to reports.
Written by Charlie Osborne, Contributing Writer

Marissa Mayer has failed in attempts to end a 10-year search pact between Yahoo and Microsoft.

According to Bloomberg, in light of the Yahoo CEO Marissa Mayer's plans to make Yahoo mobility-focused, Mayer has been eyeing a potential deal with Google -- but contractual restraints due to the firm's deal with Microsoft may have scuppered these hopes.

Citing people familiar with the matter, the publication reports that Mayer attempted to end the search pact between Microsoft and Yahoo soon after taking up her new role. However, Mayer has been met with resistance from Microsoft CEO Steve Ballmer.

In February, Mayer admitted that the 10-year agreement has not resulted in either the market share or revenue that Yahoo wanted to achieve. The collaborative search effort -- where Microsoft provides the technology for Yahoo searches -- was hoped to eventually become a competitor for Google's search facility.

The pact expires in 2020.

Mayer has said that the companies want to "collectively want to grow share rather than just trading share with each other," and at a technology conference this week, said that both firms were currently "happy with the relationship."

As a way of keeping Yahoo content three years after the pact was reached, Microsoft has recently agreed to continue paying Yahoo a guarantee for the revenue-per-search (RPS) shortfall that persists. The guarantee, which makes sure that Yahoo earns a specific level of profit no matter what happens, was meant to expire on March 31, but the Redmond giant and Yahoo will carry on the stipulation for at least one more year.

Microsoft's AdCenter technology delivers and purchases online advertising, but has not been as popular or lucrative as expected.

Reports suggest that Mayer has met with representatives of rival firm Google, and has agreed on an alternative search deal should the collaboration with Microsoft end. Either firm can terminate the deal in 2015, or if Microsoft sells or closes its Bing search engine.

Marissa Mayer has placed mobile development at the top of Yahoo's priority list. The CEO, who took over last year, has said she wishes to focus on the everyday habits of device users. Yahoo currently has 200 million monthly active mobile users, and the tech giant's app portfolio has between 60 and 75 mobile apps -- although this number of applications is expected to dwindle as operations are streamlined.

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