Microsoft and Yahoo Partnership

In an effort to increase their effectiveness as competitors against Google, Microsoft and Yahoo have teamed up for a ten-year web search partnership. The companies still need regulatory approval and there will be some logistical concerns if they are to make the partnership work, but both sides seem fairly confident that they have a real shot at pulling more search engine activity by joining forces.

The partnership does not include online display ad business, but does include Microsoft's Bing search engine features blending with Yahoo's. Shareholders in Yahoo expected as much as a $3 billion upfront payment from Microsoft, but the deal included no upfront payment at all. In response to this disappointment, Yahoo shares fell a whopping 12 percent. Microsoft shares closed 1.4 percent up and Googles down .8 percent.

Still, Yahoo expects the deal to increase its annual operating income by about $500 million and yield capital expenditure savings of $200 million. Pressure from the U.S. Justice Department dissolved a similar deal between these two giants last year and heavy scrutiny is expected on this deal as well. Anti-trust and privacy issues in particular will be investigated by the Obama administration's antitrust officials.

Deals like this often don't work out, so a lot of eyes are watching this one to see how it will play out. According to comScore, Microsoft has an 8.4% share of the U.S. search market, Yahoo has 19.6 percent and Google has 65 percent. Even if everything goes smoothly for Microsoft and Yahoo in this partnership, they still have a long way to go.

Today we'd like to congratulate April, our incredible marketing guru, for earning the distinction of the first Meyer Computer Inc. employee to hit the ten year mark!

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