Microsoft, Yahoo update search partnership deal

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Tech giants Yahoo and Microsoft on Thursday announced they have revised their search partnership deal with key changes to maintain a “strong and productive” alliance.

The partnership deal, which was agreed in 2010 by Yahoo’s Carol Bartz and Microsoft’s Steve Ballmer, allowed Yahoo to use Microsoft Bing’s search technology as well as search-based advertising system. The agreement allowed the companies to negotiate changes or to terminate the arrangement entirely after five years.

Last month, the companies extended by 30 days the deadline to renegotiate the deal.

The updated deal includes two significant improvements. First is that Yahoo will now be allowed to have more “flexibility to enhance the search experience” across mobile and desktop devices.

Secondly, the companies have modified their handling of ad sales, with Microsoft now exclusively handling the Bing ads on Yahoo Search and Yahoo continuing to sell ads through its own Gemini ads platform.

The original deal called for Microsoft to pay 88 percent of the search revenue to Yahoo. The companies said their economic arrangement won’t change under the revised agreement.

“I’m excited to announce a renewed search alliance with Microsoft. The agreement opens up significant opportunities in our partnership, enabling both partners to improve the search experience, create value for advertisers, and establish ongoing stability for partners,” Yahoo CEO Marissa Mayer noted in a blog post about the deal.

“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 Mayer.

“This renewed agreement opens up significant opportunities in our partnership that I’m very excited to explore.”
Commenting on the deal, Satya Nadella, Microsoft’s CEO, said “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.”

“Our partnership with Yahoo is one example of the diverse partnerships we’ll continue to cultivate in order to have the greatest impact for our customers.”

Research firm eMarketer predicts that Microsoft and Yahoo combined will own 6.5 percent of the $81.59 billion search market globally in 2015.