Yahoo and Microsoft stand united to overthrow Google

The details were supposed to be figured out by the month of October, but the two Internet giants took their sweet time to form every clause, and define every detail. The deal that had been announced in July received a final approval from both Microsoft and Yahoo just few days ago.

The deal and regulatory approval
The final papers were signed as Microsoft agreed to increase Yahoo’s payments, while the latter decided to send 400 of its employees, loaded with knowledge and expertise on search technology, to Microsoft.

Yahoo Chief Financial Officer Tim Morse said, "We are well down the line. We have dedicated teams running the search business and running the transition of the search business."

It is still under scrutiny from the Department of Justice that had earlier banned a search ad deal between the two companies. This is all in line with the anti-trust action of the U.S. government.

Revenue-sharing and foreseen profits
Even though the two are working in collaboration, both Yahoo and Microsoft have maintained their own separate display advertising business and sales force.

According to the deal, Yahoo will earn through a revenue-sharing agreement, which will depend on the traffic Yahoo is able to generate. Microsoft will also pay Yahoo traffic acquisition costs initially at the rate of 88 percent of the search revenue generated.

Microsoft is also planning to reimburse Yahoo $150 million for the cost of the agreement. This sum is in addition to the $50 million they would be paying Yahoo every year for the first three years. It is a ten-year contract between the two companies.

Morse had also added, "At that point, we start getting reimbursed by Microsoft for the costs of running our paid search and algorithmic search businesses. That is a terrific financial benefit for us that starts right off.

“Part of that total benefit will be these 400 or so engineers that move over. But far greater than that, that savings will be a meaningful impact to us in 2010, as soon as regulatory approval happens."

Advertising together and dethroning Google
Search engine technology is witnessing newer innovations on daily basis. As Google decided to go real-time, and provide Twitter feeds as search results, Yahoo joined the race and declared their own decision to integrate Twitter feeds in search results. Microsoft already has this provision in Bing, but the results for these feeds appear on a separate, and not the main page.

Apart from search engine, the two companies had decided to come together for the purpose of advertisement business too. Here, Yahoo will be the face presented to the world, that is, the exclusive relationship sales force in the world, while Microsoft will work backstage and power Yahoo’s search capabilities.