Microsoft And Yahoo Get DOJ, EC Approval Of Search Agreement

Microsoft and Yahoo on Thursday issued a joint statement that said that the DOJ and the European Commission had approved their search agreement "without restrictions," and that the two companies can now begin implementing the deal.

The agreement between Microsoft and Yahoo is aimed at helping them work together against common search rival Google.

Yahoo and Microsoft in July said they will work together in the online search and advertisement business, with Microsoft's Bing powering Yahoo's search capabilities and Yahoo becoming the exclusive worldwide relationship sales force for both companies' premium search advertisers.

Under the terms of the agreement, Microsoft will compensate Yahoo through a revenue-sharing agreement based on traffic generated on Yahoo's online properties and will pay Yahoo traffic acquisition costs at an initial rate of 88 percent of generated search revenue. Each company maintains its own display advertising business and sales force.

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The two finalized the terms of their agreement in December.

The delay also resulted in Microsoft deciding in December to reimburse Yahoo $150 million for expenses related to the agreement. That $150 million was in addition to the $50 million per year that Microsoft will pay Yahoo in each of the first three years of the 10-year agreement.

With regulatory approval granted, Yahoo will start transitioning Yahoo's algorithmic and paid search platforms to Microsoft, while Yahoo will be the exclusive sales force for both companies' premium search advertisers, the two said in their statement.

Under terms of the agreement, Microsoft will provide Yahoo with search result listings available through Bing, and Yahoo will integrate its content, key topic organization, and its own tools for Yahoo users.

Despite the common use by the two companies of Microsoft's Bing search platform, the two will offer their own separate user experiences.

From the advertising opportunity point-of-view, the transition is expected to be completed by year-end in the U.S. prior to the holiday season, but may be extended into 2011. Globally, the transition is expected to be complete in 2012, the two companies said.

In the statement, Carol Bartz, Yahoo's CEO, said, "This breakthrough search alliance means Yahoo! can focus even more on our own innovative search experience. Yahoo! gets to do what we do best: combine our science and technology with compelling content to build personally relevant online experiences for our users and customers."

Microsoft CEO Steve Ballmer, in that statement, said, "Although we are just at the beginning of this process, we have reached an exciting milestone. I believe that together, Microsoft and Yahoo! will promote more choice, better value and greater innovation to our customers as well as to advertisers and publishers."