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February 18, 2010

US DoJ, EU okay Microsoft-Yahoo deal

Is the deal a credible alternative to Google?

By CBR Staff Writer

Microsoft and Yahoo! have received a clearance for their search agreement from both the US Department of Justice and the European Commission, and said that they will turn their attention to the process of implementing the deal.

The deal, first announced in July 2009, is seen as a major effort by the companies to compete against the dominance of Google in the internet ad space market.

Pursuant to the agreement, Microsoft will acquire a 10-year exclusive license to Yahoo’s search technologies and will become the exclusive internet search and search advertising provider used by Yahoo. In exchange, Microsoft will retain 12% of the search revenues generated on Yahoo and its partners’ websites during the first five years of the agreement, paying 88% to Yahoo as a traffic acquisition cost.

Microsoft will provide Yahoo! with the same search result listings available through Bing, and Yahoo! will innovate around those listings by integrating Yahoo! content, enhanced listings with organised information about key topics, the companies said.

Yahoo! is expected to focus on providing search experience that allows people to find and explore the things, people and sites while Microsoft will provide the underlying platform. In addition, the companies said that they will work with advertisers, publishers and developers to make the transition efficient.

Carol Bartz, CEO of Yahoo!, said: “This breakthrough search alliance means Yahoo! can focus even more on our own innovative search experience. Yahoo! gets to do what we do best: combine our science and technology with compelling content to build personally relevant online experiences for our users and customers.”

The companies will begin the transition of algorithmic search and have set a goal of completing that effort in at least the US by the end of 2010.

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Meanwhile, the companies continue to work with regulators in Korea, Taiwan, and Japan to have all relevant information necessary to evaluate the transaction before the deal commences in those specific jurisdictions.

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