Microsoft and Yahoo Amend 10-Year Search Partnership

After just a little more than five years, Yahoo and Microsoft have agreed to amend their search partnership agreement. In order to improve the search experience, increase value for advertisers, and establish ongoing stability for the partners, the original 2009 agreement has been amended. The amendment reaffirms the commitments made by both companies and maximizes the alliance between them.

The original partnership formed in 2009 established a relationship where Microsoft exclusively provided paid and algorithmic search services on PC to Yahoo. In accordance to a revenue sharing agreement, Microsoft paid Yahoo a percentage, 88 percent, of Bing Ads revenue delivered from Yahoo searches. The structure of the revenue sharing deal remains unchanged after the amendment.

Two core areas will be improved by the agreement. First, Yahoo will gain flexibility in regards to the search experience on any platform. The previous agreement required Yahoo to use Bing search results and ads for all desktop computer searches. The new agreement will allow Yahoo new options to monetize ads which could take the form of new partnerships or its own ad units. Second, Microsoft will become the exclusive salesforce on Bing Ads platform allowing Yahoo to be the exclusive salesforce for Yahoo’s Gemini ads platform. Before, Yahoo was managing the sales of Bing search ads. Managed advertiser sales responsibilities will be transitioned this summer and will allow both companies to service advertisers more effectively.

Search accounted for 35 percent of Yahoo’s revenue in 2014 nearly $1.8 billion. According to ComScore, research firm, Yahoo accounts for 12.7 percent of desktop searches. Bing accounts for 20.1 percent of desktop searches. Google dominates the markets with 64.4 percent of desktop searches.

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