San Francisco: Yahoo! And Microsoft announced on Friday that they have finalized the details of their planned Internet search and advertising partnership.
The companies hope to implement the deal next year with the approval of anti-trust regulators.
“Yahoo! and Microsoft welcome the broad support the deal has received from key players in the advertising industry and remain hopeful that the closing of the transaction can occur in early 2010,” the companies said in a joint statement.
“Microsoft and Yahoo! believe that this deal will create a sustainable and more compelling alternative in search that can provide consumers, advertisers and publishers real choice, better value and more innovation.”
Yahoo! and Microsoft had originally planned to complete their agreement by 27 October but extended talks “given the complex nature of the transaction.”
The plan to ink a 10-year Web search and advertising pact was unveiled in July and promises to set the stage for a Yahoo!-Microsoft offensive against Google, the king of the lucrative search and advertising market.
Under the no-cash deal, Yahoo! will use Microsoft’s new Bing search engine on its own sites while Yahoo! will provide the exclusive global sales force for premium search advertisers.
Microsoft’s tie-up with Yahoo! gives the companies a larger share of the Web search market but analysts are divided on how much it will actually deliver in making inroads against powerhouse Google.
Google is the overwhelming leader in a Web search and advertising market which the research firm Forrester estimates will grow by 15% a year to more than $30 billion in 2014 in the United States alone.
Forrester analyst Rebecca Jennings was among those who said the agreement, under which Yahoo! will use Microsoft’s new Bing search engine and handle Web ad sales, would boost both companies.
“This deal should help convince even the most stubborn budget-holder that spreading their money outside of Google would be beneficial,” she said.
“This will create a more viable second-string player in all markets, giving interactive marketers a significant, credible alternative/additional outlet for their search spend,” Jennings said.
Analyst Rob Enderle of Silicon Valley’s Enderle Group agreed, saying that many advertisers were “nervous” about Google’s dominance and “would just as soon not do business with Google.”
Bing increased its share of the US search market in October, edging up half-a-point to nearly 10%, according to data from online tracking firm comScore.
Google also added half-a-point in October to reach 65.4%.
Yahoo!, Microsoft’s search partner, saw its market share decline 0.8% in October to 18.0%.
November figures have yet to be released.
It was the fifth month in a row of modest gains in search share for Bing, which Microsoft unveiled in June accompanied by a $100 million advertising campaign in a bid to challenge search juggernaut Google.
Enderle said a combined Microsoft-Yahoo! “gives them enough of a share to be a player.” “At eight percent you’re not really a player. You step up to around 30% and suddenly you’re an alternative,” he said.
Chief executive Carol Bartz said the deal will allow Yahoo! to “focus on the things we do best - being the center of people’s lives online with properties like our homepage, mail, finance, news, sports, entertainment, mobile, etc.”
Danny Sullivan, editor-in-chief of SearchEngineLand.com, a website which covers the search industry, said the agreement was a “bargain” for Microsoft, which offered $47.5 billion last year in a takeover bid for Yahoo!
“Yahoo!’s giving up on search and they’re not getting any big payment to do so,” he said. “Just look at what they were promised last year from Microsoft.”