Yahoo and Microsoft, as expected, have announced a major partnership. After a year and a half of failed talks, the pair finally have come together and cut a deal. Many changes were necessary for the deal to take place -- a succession of Yahoo's CEO leadership from co-founder Jerry Yang to outsider Carol Bartz and a new search engine from Microsoft (Bing) -- but now that it's here, it promises to change the face of the internet.
The pair will hold an estimated 28 percent of the search market, or roughly a third, behind Google, which will hold roughly two thirds of the market. The deal will last much longer than previously speculated -- 10 years.
As previously anticipated, Microsoft's new Bing search engine/algorithm will be replacing Yahoo's search. Yahoo's page will keep its look, but behind the scenes it will be powered by Bing. Yahoo will focus on selling ads using Microsoft's AdCenter platform, which bids to challenge Google's AdWords.
The two companies predict that the deal will raise revenue by over $500M USD.
Yahoo CEO Carol Bartz cheered the deal, stating, "This agreement comes with boatloads of value for Yahoo!, our users, and the industry. And I believe it establishes the foundation for a new era of Internet innovation and development. Users will continue to experience search as a vital part of their Yahoo! experiences and will enjoy increased innovation thanks to the scale and resources this deal provides.”
Bartz continued, “Advertisers will also benefit from scale and enjoy greater ease of use and efficiencies working with a single platform and sales team for premium advertisers. Finally, this deal will help us increase our investments in priority areas in winning audience properties, display advertising capabilities, and mobile experiences."
Steve Ballmer likewise was pleased by the deal, stating, "Through this agreement with Yahoo!, we will create more innovation in search, better value for advertisers, and real consumer choice in a market currently dominated by a single company. Success in search requires both innovation and scale. With our new Bing search platform, we've created breakthrough innovation and features. "
Google has previously vowed to challenge any such deal on antitrust grounds. The U.S. Department of Justice and the EU are currently considering the deal and will likely review it extensively in coming months.