Microsoft Renews Search Partnership With Yahoo, Revised Agreement Allows Yahoo With Increased Flexibility To Innovate

Yahoo Bing

Today, Microsoft announced that they are renewing the search partnership with Yahoo. But there are some major changes in the new agreement between both these companies.

  • Microsoft will 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.
  • Yahoo will to serve Bing ads and search results for a majority of its desktop search traffic. Yes, only majority of the traffic. Not all the traffic as before. This allows Yahoo to monetize rest of the traffic using their own ad platform or sell it to Google.

Yahoo CEO Marissa Mayer on this new deal,

We firmly believe that search is still in its infancy – and this partnership marks the next chapter in our exploration of how to make search truly great. I want to thank Satya Nadella and his team for working closely with us over the past few months to rejuvenate our partnership. Search has, and will continue to be, an incredibly important part of Yahoo, and this new partnership represents a major step forward in our renaissance.

Read the full press release below.

SUNNYVALE, Calif. & REDMOND, Wash.–(BUSINESS WIRE)– Today Microsoft (Nasdaq: MSFT) and Yahoo (Nasdaq: YHOO) announced that the companies amended their search partnership to improve the search experience, create value for advertisers and establish ongoing stability for partners. The update reaffirms commitments made by both companies in the original 2009 agreement, while implementing changes to keep the partnership strong and productive, with both companies committed to maximizing the alliance.

“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,” said Satya Nadella, CEO, Microsoft Corp. “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.”

“Over the past few months, Satya and I have worked closely together to establish a revised search agreement that allows us to enhance our user experience and innovate more in our search business,” said Marissa Mayer. “This renewed agreement opens up significant opportunities in our partnership that I’m very excited to explore.”

The update includes improvements in two core areas. First, 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.

Second, the update increases agility and sales focus. Microsoft will 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. Integrating the sales teams with those responsible for engineering will allow both companies to service advertisers more effectively. Microsoft and Yahoo plan to begin to transition managed advertiser sales responsibilities this summer.

The partnership, formed in 2009 by both CEOs’ predecessors, established a transformative relationship between the two companies — one where Microsoft exclusively provided paid and algorithmic search services on PC to Yahoo. The alliance also designated a revenue sharing agreement where Microsoft pays Yahoo a percentage of Bing Ads revenue delivered from Yahoo searches. This existing underlying economic structure remains unchanged with today’s updates.

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