Telecompaper

Microsoft and Yahoo! have confirmed an agreement for Yahoo! to use Microsoft's Bing search engine across its sites. The ten-year deal will make Bing the exclusive search platform for Yahoo! sites, and give Microsoft an exclusive licence to Yahoo's own search technology. Yahoo! will take over worldwide sales for both companies' search advertising, boosting their position versus market leader Google. Yahoo! expects the deal to add USD 500 million to annual operating profit and save it USD 200 million in capital spending within two years of full implementation. Microsoft will compensate Yahoo! through a revenue-sharing agreement on traffic generated on Yahoo!'s network of sites, and pay traffic acquisition costs to Yahoo! at an initial rate of 88 percent of search revenue generated on Yahoo!'s sites during the first five years of the deal. Microsoft has also agreed to maintain Yahoo's current revenue per search in each country for 18 months after implementation of the new platform. Pending reguatory approval, the companies expect the deal to close in early 2010.