Deal Between Microsoft And Yahoo Gets Approval

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The deal between Microsoft and Yahoo has gotten the thumbs up from regulators on both sides of the Atlantic. This suggests that the real work of implementing the search and advertising agreement can now begin.

There’s a long history behind it this coming together of Microsoft and Yahoo. Microsoft initially wanted to acquire Yahoo outright, placing $44 billion on the table to do just that two years ago. Yahoo rejected the advances as CEO and co-founder Jerry Yang regarded it as a bid which undervalued the company.

Microsoft walked away from the deal after more negotiating on both sides. Carol Bartz replaced Yang as CEO. There then ensued more rumors of acquisition and partnership deals on the table, and the two companies ultimately agreed on one in July, 2009. Microsoft and Yahoo closed the deal by agreeing a 10-year plan, which takes in both search and advertising.

All of Yahoo’s sites will now feature Microsoft’s power search, while Yahoo will sell the premium search-related advertising on both companies’ search results. This was a no-cash agreement, with Microsoft instead paying Yahoo for what it gave up with an 88 percent search revenue share on its own pages for the first five years of the agreement.

Though it hasn’t been the case, there were concerns that regulators on both sides of the Atlantic would interfere with the deal. Instead, this week has seen both the U.S. Department of Justice and the European Union give their official backing to the deal, which can now evolve to the next stage.

Google, which dominates both the Web search and Web advertising markets, will face a much stronger challenge as a result of this deal. And that appears to be why the deal was approved, as it could keep the market competitive rather than restrictive.

Microsoft and Yahoo now confront the challenge of executing the changes in as fluid a way as possible so as not to disrupt day to day business. In an perfect world, those using Bing or Yahoo shouldn’t actually notice any changes taking place. It’ll take some time to move all of Yahoo over to the Bing platform.