Microsoft and Yahoo have agreed to collaborate on internet search and online advertising, creating a united front to challenge Google.
Under the agreement, Microsoft will get a 10-year license for Yahoo's core search technologies, the companies said today in a statement. Microsoft's Bing will become the algorithmic search and paid search platform for Yahoo sites.
Microsoft, the world's largest software maker, is seeking more users for its Bing Internet search engine, which has about an eighth of Google's market share in the US, according to research firm ComScore Inc. Yahoo, which has posted three straight quarters of sales declines, may be able to save at least $500 million by working with Microsoft, Yahoo chief executive officer Carol Bartz said in June.
Google had about 65 per cent of the U.S. Web-search market in June, according to ComScore. Yahoo and Microsoft had 28 per cent combined.
Microsoft rose 36 cents to $23.47 yesterday in Nasdaq Stock Market trading. The shares have jumped 21 per cent in 2009. Yahoo, up 41 per cent this year, added 22 cents to $17.22.
Revenue from Web-search ads on Yahoo's pages declined 15 per cent in the second quarter, the company said last week.
Total revenue fell 13 per cent to $1.57 billion. Sales in Microsoft's online unit also declined for the quarter ended June 30th, falling 13 per cent to $731 million.
Microsoft released Bing last month in a bid to reverse five years of market-share losses to Google.
Microsoft's share of the US search market rose to 8.4 per cent in June from 8 per cent in May, according to ComScore. Google's share was unchanged, while Yahoo's dropped half a percentage point.
Bloomberg