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Microsoft and Yahoo Finalize Search Contract

Microsoft and Yahoo have finalized the legal details of their proposed search-advertising deal.

The deal was first announced back in July. On Friday, the companies announced that they have "finalized and executed the definitive Search and Advertising Services and Sales Agreement and License Agreement" based on that initial agreement.

Microsoft hopes to use the deal to boost its search user base and catch up with No. 1 search provider Google. To that end, the deal calls for Microsoft to provide its Bing search engine technology to Yahoo. Yusuf Mehdi, senior vice president of Microsoft's online audience business, recently explained that Microsoft will allocate $100 million to $200 million for turnaround costs in the first year to help with the technical integration details.

Yahoo, for its part in the deal, will maintain control over the user interface at its Web sites and will manage search-advertising customers for both itself and Microsoft.

The deal is subject to regulatory reviews, but the two companies expect to get approvals sometime in "early 2010."

Microsoft recently enhanced Bing with a new mapping capability, narrowing the gap in that respect with Google, which offers similar features in its Google Maps interface. Bing has so far been launched primarily in the U.S. market, but Microsoft is preparing other launches soon in Canada and the United Kingdom.

Microsoft still has a long ways to go to catch up with Google in search. Google currently holds 85 percent of the global search market, according to Market Share. In contrast, Bing holds a U.S. search market share ranging from three percent to 10 percent.

About the Author

Kurt Mackie is senior news producer for 1105 Media's Converge360 group.

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