Microsoft, Yahoo Have U.S. And E.U. Clearance To Move Forward On Search Deal

Microsoft and Yahoo received approval from both the U.S. Department of Justice and the European Union to move forward on the search deal aimed at taking market share from search engine giant Google.

In a joint announcement Thursday, Microsoft and Yahoo reported that the two will now turn attention to implementing the deal that should begin in the coming days. It will involve transitioning Yahoo's algorithmic and paid-search platforms to Microsoft, with Yahoo becoming the exclusive relationship sales force for both companies' search advertisers globally, according to the companies.

Aside from periodic phone, email and webinars, the two companies will communicate the transition to advertisers through a dedicated Web site. Microsoft and Yahoo execs believe the team spearheading the project can make the transition in the United States by the end of this year, but may wait until 2011 if they find it will disrupt sales for retailers during the holiday season. All global customers and partners are expected to transition by early 2012.

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The deal aims to offer improved innovation for consumers, better volume and efficiency for advertisers and better monetization opportunities for Web publishers through a platform that contains a larger pool of search queries.

"This breakthrough search alliance means Yahoo can focus even more on our own innovative search experience," Yahoo Chief Executive Officer Carol Bartz said in a prepared statement. "Yahoo gets to do what we do best: combine our science and technology with compelling content to build personally relevant online experiences for our users and customers."

Google's search engine market share in the United States fell to 65.4% in January from 65.7%, sequentially, according to research firm comScore. Microsoft's share rose to 11.3% from 10.7%, respectively, and Yahoo's share slipped to 17% from 17.3%, according to comScore.

J.P. Morgan Analyst Imran Khan expects Yahoo will continue to focus on providing an innovative search experience. "As Microsoft will only provide the search result listings available through Bing, Yahoo will still be responsible for creating a unique user experience and competing for audience, engagement, and clicks," he wrote in a research note. "Yahoo's sales team will exclusively represent and support high volume advertisers, SEO and SEM agencies, and resellers and their clients, while Microsoft will represent and support self-service advertisers."

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