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Microsoft and Yahoo seal web deal | Microsoft and Yahoo seal web deal |
(20 minutes later) | |
Yahoo and Microsoft have announced a long-rumoured internet search deal that will help the two companies take on chief rival Google. | Yahoo and Microsoft have announced a long-rumoured internet search deal that will help the two companies take on chief rival Google. |
Microsoft's Bing search engine will power the Yahoo website and Yahoo will in turn become the advertising sales team for Microsoft's online offering. | Microsoft's Bing search engine will power the Yahoo website and Yahoo will in turn become the advertising sales team for Microsoft's online offering. |
Yahoo has been struggling to make profits in recent years. | Yahoo has been struggling to make profits in recent years. |
But last year it rebuffed several takeover bids from Microsoft in an attempt to go it alone. | But last year it rebuffed several takeover bids from Microsoft in an attempt to go it alone. |
Microsoft boss Steve Ballmer said the 10-year deal would provide Microsoft's Bing search engine with the necessary scale to compete. | Microsoft boss Steve Ballmer said the 10-year deal would provide Microsoft's Bing search engine with the necessary scale to compete. |
I believe it establishes the foundation for a new era of internet innovation and development Carol Bartz, Yahoo chief executive | I believe it establishes the foundation for a new era of internet innovation and development Carol Bartz, Yahoo chief executive |
"Through this agreement with Yahoo, we will create more innovation in search, better value for advertisers, and real consumer choice in a market currently dominated by a single company," said Mr Ballmer. | "Through this agreement with Yahoo, we will create more innovation in search, better value for advertisers, and real consumer choice in a market currently dominated by a single company," said Mr Ballmer. |
In return for ceding control of its search engine, Yahoo will get to keep 88% of the revenue from all search ad sales on its site for the first five years of the deal, and have the right to sell adverts on some Microsoft sites. | In return for ceding control of its search engine, Yahoo will get to keep 88% of the revenue from all search ad sales on its site for the first five years of the deal, and have the right to sell adverts on some Microsoft sites. |
'New era' | 'New era' |
Yahoo said the deal would benefit Yahoo's users and advertisers. | Yahoo said the deal would benefit Yahoo's users and advertisers. |
MICROSOFT-YAHOO TIMELINE January 2008: Microsoft offers to buy Yahoo for $44.6bn in cash and shares, later raised to $47.5bnMay 2008: Microsoft walks away from the table after the two sides fail to agree on a priceJune 2008: Yahoo strikes a deal to use Google's technology, with Google ads appearing on some Yahoo search results November 2008: Google abandons the Yahoo deal after objections from anti-trust regulators in the USNovember 2008: Yahoo co-founder Jerry Yang stands down as the firm's bossApril 2009: Yahoo says it will cut 5% of its workforce after quarterly profits drop sharplyMay 2009: Microsoft relaunches its own search engine, now branded bing.comJuly 2009: After new speculation, Microsoft and Yahoo finally announce a web search deal class="" href="/2/hi/business/7222431.stm">Profiles: Yahoo, Google and Microsoft | |
"This agreement comes with boatloads of value for Yahoo, our users, and the industry. And I believe it establishes the foundation for a new era of internet innovation and development," said Yahoo chief executive Carol Bartz. | "This agreement comes with boatloads of value for Yahoo, our users, and the industry. And I believe it establishes the foundation for a new era of internet innovation and development," said Yahoo chief executive Carol Bartz. |
The deal became possible after Yahoo's co-founder Jerry Yang stepped down as chief executive of the company late last year. | The deal became possible after Yahoo's co-founder Jerry Yang stepped down as chief executive of the company late last year. |
"Only a Yahoo outsider like Ms Bartz could do such a deal," said Tim Weber, business editor of the BBC News website. | "Only a Yahoo outsider like Ms Bartz could do such a deal," said Tim Weber, business editor of the BBC News website. |
"She has no sentimental attachment to what was once the core of Yahoo, its search business. Microsoft was helped by the fact that at long last it managed to develop a search engine - Bing - that is a credible alternative to search giant Google." | "She has no sentimental attachment to what was once the core of Yahoo, its search business. Microsoft was helped by the fact that at long last it managed to develop a search engine - Bing - that is a credible alternative to search giant Google." |
Yahoo said the deal would boost annual operating income by $500m and secure $200m in savings. | Yahoo said the deal would boost annual operating income by $500m and secure $200m in savings. |
The tie-up will give Microsoft and Yahoo a combined market share in the US search ad market of about 30%. | The tie-up will give Microsoft and Yahoo a combined market share in the US search ad market of about 30%. |
Google would still be the dominant force with a share of about 65%. | Google would still be the dominant force with a share of about 65%. |
Negotiations | Negotiations |
The deal ends years of back-and-forth negotiations between the two companies. | The deal ends years of back-and-forth negotiations between the two companies. |
Microsoft originally offered to buy Yahoo in January 2008 - with an offer worth about $47.5bn. | Microsoft originally offered to buy Yahoo in January 2008 - with an offer worth about $47.5bn. |
But Mr Ballmer later withdrew that bid after Yahoo's then boss, Mr Yang, demanded a higher price. | But Mr Ballmer later withdrew that bid after Yahoo's then boss, Mr Yang, demanded a higher price. |
Yahoo instead opting for an online advertising partnership with rival Google instead. | Yahoo instead opting for an online advertising partnership with rival Google instead. |
But that tie-up was later abandoned because of the risk of a protracted battle with regulators over competition issues. | But that tie-up was later abandoned because of the risk of a protracted battle with regulators over competition issues. |