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Microsoft-Yahoo! search deal approved by regulators

February 22, 2010
The search deal between Microsoft and Yahoo! that was first announced in July last year has finally been approved by regulators in both the United States and Europe.

The landmark 10-year search partnership between the two former rivals was finalised in December, but still required approval from the US Department of Justice and the European Commission.

The Commission ruled yesterday that the deal "would not significantly impede effective competition" in the search engine market, as even by combining their respective forces, the two internet giants hold less than 10 per cent of the European market - the other 90 per cent belonging to search behemoth Google.

According to the BBC, the partnership will see Microsoft's Bing search engine powering Yahoo! websites, with Yahoo! in turn providing the main advertising sales team for Bing. Microsoft will retain 12 per cent of search revenue generated via Yahoo's website for the first five years of the deal, with the other 88 per cent being paid to Yahoo!

The European Commission supported the deal, which aims "to increase competition in internet search and search advertising by allowing Microsoft to become a stronger competitor to Google."

The CEOs of Microsoft and Yahoo! are both enthusiastic about the deal, with Microsoft's Steve Ballmer calling it "an exciting milestone" and Yahoo!'s Carol Bartz declaring it a "breakthrough search alliance."

Ballmer also said: "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."

Industry analysts are less optimistic however, with many believing that the deal will have little impact on Google's dominance of all things search. Analyst Chris Green of DMG Europe explained: "This deal gives Microsoft a bigger slice of the internet advertising business, but it is still miles and miles behind Google.

"Microsoft's Bing is technically a very good search engine, but no-one uses it, and it doesn't currently make a profit.

"The deal with Yahoo should turn it into a not-too-shabby and profitable world number two search engine. But still no Google."


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