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Microsoft and Yahoo Agree to New Terms in Search Deal

At a time when Yahoo was contractually able to opt out of its search partnership with Microsoft, Yahoo CEO Marissa Mayer negotiated a much more flexible arrangement for her Internet company.

Yahoo and Microsoft on Thursday announced amendments to the deal originally struck in 2009. Yahoo will now be obligated only to serve Bing ads against search results for a majority of its desktop search traffic. Previously, Yahoo needed to put Bing ads against 100 percent of its traffic.

The deal is also non-exclusive, meaning if Yahoo wants to use its Yahoo Gemini ads platform for those desktop ads, it can. Or it could sell the traffic to another provider -- say Google, should Google be interested.

The other big change in the deal is that Microsoft will be responsible for selling all Bing ads, while Yahoo will be responsible for selling any Gemini ads. Previously Yahoo's salesforce handled a lot of the Bing sales. The two companies plan to begin transitioning those sales responsibilities over the summer.

While it's not a change, the deal remains non-exclusive in mobile search, leaving Yahoo with maximum flexibility in that emerging area.

"Over the past few months, [Microsoft CEO] Satya [Nadella] and I have worked closely together to establish a revised search agreement that allows us to enhance our user experience and innovate more in our search business," Mayer said in a statement. "This renewed agreement opens up significant opportunities in our partnership that I'm very excited to explore."

One upshot is that Microsoft will have to hire some search salespeople and Yahoo will have to hire some search engineers.

For his part, Nadella emphasized the ongoing value of the partnership. "Our global partnership with Yahoo has benefited our shared customers over the past five years and I look forward to building on what we've already accomplished together," Nadella's statement said. "Our partnership with Yahoo is one example of the diverse partnerships we'll continue to cultivate in order to have the greatest impact for our customers."

For Microsoft, the Yahoo agreement comes at an interesting time. The partnership arguably helped Bing claw some search share from Google. The new Yahoo arrangement is a wild card just as Google faces antitrust scrutiny in the European Union.

Posted by Scott Bekker on April 16, 2015 at 12:25 PM


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