New details about the Yahoo-Microsoft deal have emerged, including news that Microsoft will hire 400 departing Yahoo employees.  (Source: G. Yonis)
New details have emerged on the terms of Microsoft's deal with Yahoo

At long last Microsoft and Yahoo are united.  While staying separate corporate entities, Yahoo's search algorithm with be replaced by Microsoft's fancy new Bing search engine and Yahoo's staff will be put to work selling Microsoft's new advertising platform. 

The government's approval will make or break the deal, which search market leader Google indicated it may fight on antitrust grounds.  As the companies began filing the first of their documents pertaining to the deal with the U.S. Securities and Exchange Commission -- a form 8-K filing from Yahoo -- new specifics have come to light about exactly what it took to reach a deal.

According to the filing Microsoft will pay Yahoo $50M USD this year to cover "transition and implementation costs".  It will also hire 400 Yahoo employees.  However, it will in return receive 12 percent of Yahoo's advertising revenue from searches.  In five years a variety of options are on the table for both companies that could raise Microsoft's cut to as much as 17 percent or drop it to as little as 7 percent.

The companies hope to have the deal finalized by July 29, 2010.  If they fail to meet this date, either company can terminate the deal, but they also have the option of a six month extension to hammer out a finalized partnership. 

Microsoft at one time offered Yahoo $44.6B USD for a full acquisition, and reportedly offered considerably more behind close doors.  Ultimately Yahoo rejected the offer, and in following months shareholders saw their stock price drop and thousands of Yahoo employees were laid off.  In the end, though, with new members on the board, a new CEO -- Carol Bartz -- Yahoo managed to work out its differences with Microsoft.

If approved, the pair will hold approximately 30 percent of the search market.  Google owns approximately two thirds of the market.

"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997

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