Microsoft and Yahoo gang up on Google

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This was published 14 years ago

Microsoft and Yahoo gang up on Google

Updated

Yahoo and Microsoft have reached agreement on a long-awaited web search partnership that will unite the two companies against market leader Google.

Under the no-cash deal, Yahoo will use Microsoft's new Bing search engine on its own sites, while Yahoo will act as the exclusive global sales force for the companies' premium search advertisers.

Yahoo CEO Carol Bartz.

Yahoo CEO Carol Bartz.

According to research firm ComScore, Google has a 65 per cent share of the lucrative search market. The combined forces of Yahoo and Microsoft will have a 30 per cent market share.

Yahoo, which last year turned down a $US47.5 billion takeover bid from Microsoft, said it stood to gain about $US500 million in annual operating income and $US200 million in capital expenditure savings through the agreement with the software giant.

Yahoo also estimated the deal would provide it with a $US275 million benefit to annual operating cash flow.

"This agreement comes with boatloads of value for Yahoo, our users, and the industry. And I believe it establishes the foundation for a new era of internet innovation and development," Yahoo chief executive Carol Bartz said in a statement.

The partnership, Microsoft said, "will improve the Web search experience for users and advertisers, and deliver sustained innovation to the industry."

Microsoft chief executive Steve Ballmer said the deal will enable Bing to better compete against Google, as well as attract more users and advertisers.

"Through this agreement with Yahoo, we will create more innovation in search, better value for advertisers, and real consumer choice in a market currently dominated by a single company," Ballmer said.

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"This agreement gives us the scale and resources to create the future of search."

The agreement, which has a 10-year term, will be subject to review by US regulatory authorities, the companies said.

It is restricted to internet search and related advertising revenue, while the pair would retain full autonomy on other properties and products such as email, instant messaging and display advertising.

Calling the link-up a "significant opportunity," Yahoo chairman Roy Bostock said the company's board backed it with its "full and unanimous support."

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"Microsoft is an industry innovator in search, and it is a great opportunity for us to focus our investments in other areas critical to our future," he said.

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