Microsoft and Yahoo havereached an agreementon an online
search and advertising partnership aftermonths of speculation.
Instead of a buyout, as originally planned by Microsoft, the
two will enter into a revenue sharing agreement. It is expected to
be announced officially today (29 July 2009).
Former Yahoo chief executive Jerry Yang rejected a buyout offer
from Microsoft at $33 a share - $47.5bn in total - in February
2008.
The partnership deal comes after
months of intermittent talks about
joining forces in the online advertising market to challenge
Google.
Under the expected deal, Microsoft's recently-launched Bing
search engine will drive Yahoo's searches, according to
Advertising
Age. Yahoo will handle advertising sales using Microsoft
technology.
The partnership is expected to step up Microsoft's bid to
increase its 8.4% share of the search market dominated by
Google.
By adding Yahoo's 19.6% share, the deal will boost Bing's share
to nearly 30% against Google 65% share.
Yahoo board member
Carl Icahn and
other shareholders in both companies have been championing a
deal with Microsoft for several months.
Shares of both companies increased slightly in after-hours
trade. Yahoo's share price increased $0.17 to $17.39 and Microsoft
shares climbed $0.04 to $23.47.
Advertisers are also expected to welcome the deal because it
will foster competition by creating a second strong search
company.
The deal still faces approval by US anti-trust regulators who
blocked an advertising partnership between
Yahoo and Google last year.
Microsoft was among those opposed to the deal on the grounds
that a Google partnership with Yahoo would threaten to limit the
web ad market for advertisers.
Microsoft, Yahoo and Google work together on human rights online
>>