By Angela Chen
Yahoo Inc. and Microsoft Corp. have updated their search
partnership to allow more flexibility in how the results are
presented and how the advertising teams are managed.
The news comes after months of negotiation over a deal that has
caused friction between the two tech giants. Shares of Microsoft
slipped 7 cents in morning trading to $42.18, while Yahoo shares
added 7 cents to $45.80.
The new terms update the original 2009 agreement, created by the
predecessors to the current chief executives, Microsoft's Satya
Nadella and Yahoo's Marissa Mayer.
Under the original 10-year agreement, Microsoft provided search
services on computers for Yahoo, and paid Yahoo a percentage of
Bing revenue delivered from the latter company's searches.
Microsoft controls the technology underpinning searches across both
companies' sprawling universe of websites. Yahoo at times has
chafed at elements of the partnership, which generates 37% of its
revenue.
Now, Yahoo will have increased flexibility on how the results
are presented on desktops and mobile devices. Yahoo, though, will
continue serving Bing ads and results for a majority of its desktop
search traffic.
Microsoft also will become the exclusive sales force for ads for
Bing, while Yahoo will be the exclusive sales force for its Gemini
ads.
Both will then integrate the sales teams with the engineering
teams, which "will allow both companies to service advertisers more
efficiently, " the companies said. That transition will occur this
summer.
Representatives for both companies weren't immediately available
for further comment.
The 2009 contract allowed for the partners to re-examine the
deal at its halfway point, which passed in February. In late March,
the companies mutually agreed to extend the deadline to April
24.
Ms. Mayer, a former Google Inc. search executive, had made it
clear she is unhappy with the terms of the partnership. She has
worked to bulk up Yahoo's Web-search technology and ad sales in
areas that don't infringe on the agreement with Microsoft, such as
searches done on mobile devices.
Neither Yahoo or Microsoft alone can hope to attract the number
of searches executed by Google. Before Yahoo and Microsoft teamed
up in search, the two companies together handled about 28% of Web
searches in the U.S. In February, their combined market share
amounted to 32.6% of U.S. desktop searches, according to comScore
Inc.
Write to Angela Chen at angela.chen@dowjones.com
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