After years of on again, off again negotiations, Yahoo has finally agreed to a 10-year deal with Microsoft. The partnership clearly targets one thing: Google. Each company has had Google in its crosshairs for sometime, and working together may help them gain some ground. Will it work?
The deal is a partnership, not an acquisition. The two will share advertising revenue. Yahoo will still sell search ads on its and now Microsoft's sites. The implications, according to according to AllThingsD:
Doing its own search ads means the cost savings to Yahoo will be less than previously estimated, but it also solves its longstanding issues about control of relationships with advertisers and also of consumer data.
This makes the deal much less significant than ones previously envisioned, which included Microsoft taking over both Yahoo's search and its text-based search advertising businesses, in exchange for large payments and guaranteed revenue.
The web search is also big news. We'll see Microsoft's new Bing appearing on Yahoo sites. According to Derek, Bing's search gives Google a run for its money, so that might draw more searchers to Yahoo from Google.
The deal was formally announced this morning. Both Microsoft and Yahoo should benefit from the partnership. Microsoft will get lots more queries through Yahoo's site. Yahoo will get more search-advertising revenue. There are also likely some synergies to be had. For example, the Bing search may make Yahoo's overall site more attractive, feeding new search traffic to its other services.
Google, however, is still a force to be reckoned with. As a result, it's hard to really know who will win the battle between Yahosoft and Google, but a bloody battle it will be.