Home U.S. and E.U. Approve Microsoft/Yahoo Search Deal: What it Means for Consumers and Developers

U.S. and E.U. Approve Microsoft/Yahoo Search Deal: What it Means for Consumers and Developers

The European Union and the U.S. Department of Justice just cleared the proposed search deal between Microsoft and Yahoo. Under the terms of this deal, Microsoft’s Bing will soon replace Yahoo’s own search engine on Yahoo’s sites, while Microsoft will get an exclusive 10-year license to Yahoo’s search technology. Yahoo will receive 88% of all the revenues from search ads on its site for the first five years of the agreement and handle the sales for Microsoft’s and Yahoo’s premium search advertising inventory.

What Does this Mean for Consumers?

First of all, it’s important to note that while Yahoo will incorporate Bing’s search results, the company has no plans to scrap any of the auxiliary search products that currently surround Yahoo’s search results. This means that Yahoo will continue to show results from it’s own news product on its search results pages, for example. Yahoo’s Search Pad and Search Scan apps that allow users to filter searches will also remain on the search results pages.

According to Yahoo’s own announcement, this deal also means that the company can now focus on providing even more additional services around search, without having to focus on maintaining its own search engine.

Nothing New for Yahoo

For Yahoo, using somebody else’s search technology isn’t really anything new. Before launching its own search product, Yahoo had a partnership with Google that lasted from 2002 to 2004.

Overall, Bing offers better search results than Yahoo’s own search engine. Besides better search results, Yahoo’s users probably won’t notice any major differences once Yahoo begins to use Bing. According to Yahoo’s statement, this implementation will begin in the next few days, though the exact date for the transition isn’t clear yet.

More Competition for Google

Bing, which is already growing at a steady clip will not become and even more important rival for Google’s search engine. While anybody would be hard-pressed to argue that Google isn’t innovating fast enough, this renewed competition from Bing will surely put some pressure on Google to innovate even faster.

In addition, this deal also makes Microsoft and bigger player in the search engine advertising business, a field that Google can currently dominate because of the sheer size of its market share.

And What About Developers?

Yahoo also just posted some information about what it plans to do with its developer tools now that this deal has been cleared. The overall message in Yahoo’s announcement to developers, though, is that the company doesn’t really know what it will do yet.

For BOSS, Yahoo and Microsoft are considering a fee-based structure, the future of SearchMonkey is unclear (“we’re working hard to determine which path provides the best value for site owners and end users”) and with regards to Yahoo’s Site Explorer, Yahoo is also still considering its options.

Press Release

SUNNYVALE, Calif. & REDMOND, Wash.–(BUSINESS WIRE)–Microsoft (Nasdaq:MSFT – News) and Yahoo! (Nasdaq:YHOO – News) announced today that they have received clearance for their search agreement, without restrictions, from both the U.S. Department of Justice and the European Commission, and will now turn their attention to beginning the process of implementing the deal.

Implementation of the deal is expected to begin in the coming days and will involve transitioning Yahoo!’s algorithmic and paid search platforms to Microsoft, with Yahoo! becoming the exclusive relationship sales force for both companies’ premium search advertisers globally. Once the transition is completed, the companies’ unified search marketplace will deliver improved innovation for consumers, better volume and efficiency for advertisers and better monetization opportunities for web publishers through a platform that contains a larger pool of search queries.

“This breakthrough search alliance means Yahoo! can focus even more on our own innovative search experience,” said Yahoo! Chief Executive Officer Carol Bartz. “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.”

Microsoft CEO Steve Ballmer concurred with Bartz’s assessment. “Although we are just at the beginning of this process, we have reached an exciting milestone,” Ballmer said. “I believe that together, Microsoft and Yahoo! will promote more choice, better value and greater innovation to our customers as well as to advertisers and publishers.”

Consumer Search Experience

Under terms of the agreement, which was announced in late July 2009, Microsoft will provide Yahoo! with the same search result listings available through Bing, and Yahoo! will innovate around those listings by integrating rich Yahoo! content, enhanced listings with conveniently organized information about key topics, and tools to tailor the experience for Yahoo! users.

Yahoo! will focus on providing a compelling and innovative search experience that allows people to find and explore the things, people and sites that matter most to them. While Microsoft will provide the underlying platform, both companies will continue to create different, compelling and evolving experiences, competing for audience, engagement and clicks.

Transition Timeline

Yahoo! and Microsoft will work with advertisers, publishers and developers on a customized plan designed to make the transition as efficient and seamless as possible. Both companies will begin working closely with most partners well in advance of their planned transition to the Microsoft platform and will communicate important information to partners about the transition periodically via phone, email, webinars and a newly created website at www.searchalliance.com.

The companies will begin the transition of algorithmic search and have set a goal of completing that effort in at least the United States by the end of 2010. The companies also hope to make significant progress transitioning U.S. advertisers and publishers prior to the 2010 holiday season, but may wait until 2011 if they determine that the transition will be more effective after the holiday season. All global customers and partners are expected to be transitioned by early 2012.

Customer Relationships

Once the transition is in place, Yahoo! and Microsoft will each represent and provide customer support to different advertiser segments. Yahoo!’s sales team will exclusively represent and support high volume advertisers, SEO and SEM agencies, and resellers and their clients. Microsoft will represent and support self-service advertisers.

Regulatory Summary

Although the transaction previously was cleared by regulators in Australia, Brazil and Canada, the terms of the agreement required clearance by U.S. and European regulators before it could commence. Meanwhile, Microsoft and Yahoo! continue to work with regulators in Korea, Taiwan, and Japan to ensure that they have all relevant information necessary to evaluate the transaction before the deal commences in those specific jurisdictions.

About Microsoft

Founded in 1975, Microsoft (Nasdaq:MSFT – News) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at http://www.microsoft.com/presspass on Microsoft’s corporate information pages. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://www.microsoft.com/presspass/contactpr.mspx.

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