Microsoft, Yahoo team up for search and advertising

The long-rumoured partnership between Microsoft and Yahoo has finally come to pass, but not as a merger. Instead, the two companies will combine their search and advertising experience to take on the might of Google.

Since the collapse of Microsoft’s $45bn offer for Yahoo in 2008, discussion has focused on how else the two giants might combine their strengths.

Under the deal announced Wednesday, Microsoft’s Bing  search engine will power Yahoo! search while Yahoo will become the exclusive worldwide sales force for both companies’ premium search advertisers.

Recently installed Yahoo CEO Carol Bartz said: “Users will continue to experience search as a vital part of their Yahoo! experiences and will enjoy increased innovation thanks to the scale and resources this deal provides. Advertisers will also benefit from scale and enjoy greater ease of use and efficiencies working with a single platform and sales team for premium advertisers. Finally, this deal will help us increase our investments in priority areas in winning audience properties, display advertising capabilities, and mobile experiences.”

But what this deal is really about is Microsoft and Yahoo going up against the search and advertising giant Google, “providing a viable alternative to advertisers…so that advertisers no longer have to rely on one company that dominates more than 70 per cent of all search,” in the words of Microsoft CEO Steve Ballmer.

He said the agreement will give Bing the scale necessary to compete more effectively, attracting more users and advertisers, which in turn will lead to more relevant ads and search results.