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Microsoft renews its search deal with Yahoo

Makes very little hay while the sun is out
Wed May 08 2013, 13:19
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SEARCH ENGINE PROVIDER FOR HIRE Microsoft has extended its deal with Yahoo to be the web portal's exclusive search provider.

Yahoo signed a deal with Microsoft in 2009 that came into force the following year and effectively turned Yahoo from an internet search engine provider into an advertising broker, with Microsoft's Bing providing Yahoo's internet search engine. The two firms signed a 10 year deal with exclusivity clauses that can be exited during the term, however Microsoft has signed a deal to continue being Yahoo's exclusive search engine provider.

Tucked into Yahoo's 10-K filing with the US Securities and Exchange Commission, Microsoft's decision to renew also revealed some interesting terms of the deal. For example, Microsoft gets just 12 percent of revenue generated by its search results, an amount that could decrease to seven percent if Microsoft doesn't renew what Yahoo calls its "sales exclusivity for premium search advertisers".

Microsoft's chance to remove its exclusivity will come on 23 February 2015, five years into the deal. However should Microsoft decide to continue with its present arrangement, it will start seeing 17 percent of revenue generated.

As Yahoo tries to turn its fortunes around, the search deal with Microsoft is a throwback that could limit the firm's ability to do business with Microsoft's rivals, such as Apple and Samsung. Microsoft's decision to only receive 12 percent of revenue generated by Yahoo search results also highlights how desperate the company must have been to sign a deal so its web search products had respectable market share.

Yahoo said it still has $258m and $268m in uncollected monies from its deal with Microsoft that it filed in its accounts dated on 31 December 2012 and 31 March 2013, respectively, which suggests that Microsoft took somewhere in the region of $30m a quarter from the deal during that period. µ


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