The long-term search partnership between Microsoft and Yahoo, that was likely to witness a termination since the expiration of 5 year-term between the two parties, has finally reached to a conclusion and will continue to benefit each other until to the very last of this agreement.
Back in 2009, Microsoft and Yahoo signed a 10 year-long search partnership according to which Microsoft was supposed to power Yahoo search, and Yahoo to become the ad sales force for Microsoft’s premium properties. The purpose was to fight against Google, which has quite often proved its leadership in search technologies as well as income via ads. The deal includes various clauses that empowers each party to negotiate changes or to terminate the arrangement entirely after five years.
The deal also empowers Yahoo to terminate the deal at the end of fifth year if its 12-month average revenue-per-search (RPS) in the U.S. was less than a certain percentage of Google’s estimated RPS. Yahoo has been falling on that for quite some time and was always compensated by Microsoft.
Now that the 5 year interval had passed, the world had their eyes glued to both the parties to know their stand. However, the tech giants decided to extend the deadline period by 30 days for re-negotiation purposes.
Yahoo today said in a blog post that the companies amended their search partnership to improve the search experience, create value for advertisers and establish ongoing stability for partners. That’s a positive sign from both the tech giants, especially when we were expecting that the deal would be terminated. However, the companies have decided to give it another chance and made few changes to the terms quoted in the deal.
Satya Nadella, CEO, Microsoft Corp said –
Our global partnership with Yahoo has benefited our shared customers over the past five years and I look forward to building on what we’ve already accomplished together. Our partnership with Yahoo is one example of the diverse partnerships we’ll continue to cultivate in order to have the greatest impact for our customers.
First of the changes made to this strategic partnership says that “Yahoo will now have increased flexibility to enhance the search experience on any platform, since the partnership is non-exclusive for both desktop and mobile. Yahoo will continue to serve Bing ads and search results for a majority of its desktop search traffic.”
The other change focuses on the advertisement section, which happens to be a prime attribute to Yahoo’s income from this partnership. Microsoft will now become the exclusive salesforce for ads delivered by Microsoft’s Bing Ads platform, while Yahoo will continue to be the exclusive salesforce for Yahoo’s Gemini ads platform. This would aid Yahoo to boost up the revenue it generates from this partnership, which has been always lower than expected and was compensated by Microsoft each time.
Even after their collective efforts, Google pertains to be the world’s top search engine with roughly two-thirds of the U.S. search market. Now that the search partnership has been saved from a rough termination, Yahoo expects to monetize a little bit more and compete Google’s search engine at the same time.