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Yahoo and Microsoft agreed to a 10-year partnership.  Combining both Yahoo and Microsoft creates a market share of 28% of the Internet search market still lower than Google’s 65% in the United States.   The combined companies Yahoo and Microsoft makes it the number 2 search engine behind Google. According to ComScore Inc., Google is even more dominant in the rest of the world, with a global share of 67 percent compared to a combined 11 percent for Microsoft and Yahoo.

• Microsoft will acquire an exclusive 10 year license to Yahoo!’s core search technologies.
• Microsoft will be able to integrate Yahoo! search technologies into its existing web search platforms
• Yahoo! will keep its existing search affiliate partnerships.
• Microsoft’s Bing will also be the exclusive algorithmic search and paid search platform for Yahoo! sites. Yahoo! Continues to use its technology and data in other areas of its business such as enhancing display-advertising technology.
• Each company will have separate display advertising business.
• Self-serve advertising for both companies will be fulfilled by Microsoft’s AdCenter platform, and prices for all search ads will continue to be set by AdCenter’s automated auction process.

The partnership still has to be approved by the Federal Trade Commission.  Sen. Herb Kohl said the Senate antitrust subcommittee he chairs will review the deal “because of the potentially far-reaching consequences for consumers and advertisers and our concern about dampening the innovation we have come to expect from a competitive high-tech industry.”

In our perspective this deal does not really change anything from the search point of view. It will create more advertising opportunities, bringing the share to 28%. The advertisers gain more exposure. We do not believe that there will be much of an impact. Furthermore, the search problem for Yahoo and Microsoft still remains and Google clearly is the dominating force and this will not make a significant difference.