Yahoo could pull the plug on Microsoft search deal

Yahoo can escape from its search deal with Microsoft if undisclosed search and revenue targets are missed, a regulatory filing has revealed.

Yahoo can escape from its search deal with Microsoft if undisclosed search and revenue targets are missed, a regulatory filing has revealed.

Documents filed by Yahoo with the US Securities Exchange show the internet firm can walk away if the combined share of search queries falls below a set level, according to the Financial Times.

Yahoo can also pull out of the deal if its revenue per search drops below a set percentage of Google's.

The documents also show for the first time that Microsoft will pay Yahoo $50m in each of the first three years of the 10-year deal to defray transition costs.

These payments are in addition to Yahoo's projected $275m in annual net income gains from the deal with Microsoft.

When the deal was announced, the partners said Microsoft will provide the search results to its own Bing search engine as well as Yahoo's pages.

Microsoft will also process the self-service adverts linked to specified search phases and Yahoo will handle face-to-face sales of search adverts for both companies.

This means Microsoft is taking over the technology component of the search operations that will enable Yahoo to save millions of dollars while keeping 88% of revenue from adverts placed on its pages for five years.

Yahoo will get between 83% and 93% of that revenue in the following five years, depending on options given to each side, according to the latest documents.

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