Microsoft, Yahoo search and advertising deal gets approved in U.S. and EU
The Microsoft and Yahoo deal has got the thumbs up from regulators on both side of the Atlantic. Which means the real work of implementing the search and advertising agreement can now begin.
The coming together of Microsoft and Yahoo has a long history behind it. Microsoft at first wanted to acquire Yahoo outright, laying $44 billion on the table to do just that two years ago. Yahoo rebuffed the advances as CEO and co-founder Jerry Yang considered it a bid which undervalued the company.
After much more to-ing and fro-ing on both sides, Microsoft walked away from the deal and Yang was replaced as CEO by Carol Bartz. There then followed more rumors of acquisition and partnership deals on the table, and the two companies eventually agreed on one in July 2009.
Microsoft and Yahoo closed the deal by agreeing a 10-year plan which takes in both search and advertising.
Microsoft will now power search on all of Yahoo’s sites, while Yahoo will sell the premium search-related advertising on both companies’ search results. This was a no-cash deal, with Microsoft instead paying Yahoo for what it gave up with an 88 percent search revenue share on its own pages for the first five years of the deal.
There were concerns that regulators on both sides of the Atlantic would shutter the deal, but that hasn’t been the case. Instead, this week has seen both the U.S. Department of Justice and the European Union give their formal backing to the deal, which can now progress to the next stage.
The net result of this deal should be a much stronger challenge to Google, which dominates both the Web search and Web advertising markets. And that seems to be why the deal was approved, as it could keep the market competitive rather than restrictive.
Both Microsoft and Yahoo now face the challenge of implementing the changes in as fluid a way as possible so as not to disrupt business at all. In an ideal world, anyone using Bing or Yahoo shouldn’t actually notice the changes taking place. It’ll take until at least 2012 to move all of Yahoo over to the Bing platform, at which point the second phase of the deal will begin.
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