The agreement details of the Yahoo-Microsoft deal
Remond, Jul 30: The on again off again deal between Yahoo and Microsoft was finally clinched on Wednesday, Jul 29. The two companies reached an agreement on the internet search to challenge the monopoly of Internet giant, Google.
According to the 10 year agreement, Microsoft's new search Bing will take care of all the search queries on Yahoo, while Yahoo will act as the sales force for both the companies' premium search advertisers.
The key terms of this major deal are given below:
-
The
term
of
the
agreement
is
10
years
-
Microsoft
will
acquire
an
exclusive
10
year
license
to
Yahoo!'s
core
search
technologies,
and
Microsoft
will
have
the
ability
to
integrate
Yahoo!
search
technologies
into
its
existing
web
search
platforms
-
Microsoft's
Bing
will
be
the
exclusive
algorithmic
search
and
paid
search
platform
for
Yahoo!
sites.
Yahoo!
will
continue
to
use
its
technology
and
data
in
other
areas
of
its
business
such
as
enhancing
display
advertising
technology
-
Yahoo!
will
become
the
exclusive
worldwide
relationship
sales
force
for
both
companies'
premium
search
advertisers.
Self-serve
advertising
for
both
companies
will
be
fulfilled
by
Microsoft's
AdCenter
platform,
and
prices
for
all
search
ads
will
continue
to
be
set
by
AdCenter's
automated
auction
process
-
Each
company
will
maintain
its
own
separate
display
advertising
business
and
sales
force
-
Yahoo!
will
innovate
and
"own" the
user
experience
on
Yahoo!
properties,
including
the
user
experience
for
search,
even
though
it
will
be
powered
by
Microsoft
technology
-
Microsoft
will
compensate
Yahoo!
through
a
revenue
sharing
agreement
on
traffic
generated
on
Yahoo!'s
network
of
both
owned
and
operated
(O&O)
and
affiliate
sites
- Microsoft will pay traffic acquisition costs (TAC) to Yahoo! at an initial rate of 88% of search revenue generated on Yahoo!'s O&O sites during the first 5 years of the agreement.
- Yahoo! will continue to syndicate its existing search affiliate partnerships. -
Microsoft
will
guarantee
Yahoo!'s
O&O
revenue
per
search
(RPS)
in
each
country
for
the
first
18
months
following
initial
implementation
in
that
country.
-
At
full
implementation
(expected
to
occur
within
24
months
following
regulatory
approval),
Yahoo!
estimates,
based
on
current
levels
of
revenue
and
current
operating
expenses,
that
this
agreement
will
provide
a
benefit
to
annual
GAAP
operating
income
of
approximately
$500
million
and
capital
expenditure
savings
of
approximately
$200
million.
Yahoo!
also
estimates
that
this
agreement
will
provide
a
benefit
to
annual
operating
cash
flow
of
approximately
$275
million.
- The agreement protects consumer privacy by limiting the data shared between the companies to the minimum necessary to operate and improve the combined search platform, and restricts the use of search data shared between the companies. The agreement maintains the industry-leading privacy practices that each company follows today.
The agreement, however, does not cover each company's web properties and products, email, instant messaging, display advertising, or any other aspect of the companies' businesses. This means that the two companies will continue to compete with each other in these arenas.
Users and advertisers can access more details on the agreement on choicevalueinnovation.com
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