Microsoft and Yahoo finalize search contract

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The companies have finalized the legal details of their proposed search-advertising deal, which Microsoft hopes will boost its search user base and help it catch up with No. 1 Google.

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

The deal was first announced back in July. On Dec. 4, the companies said they had "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 for online audience business at Microsoft, recently said the company will allocate $100 million to $200 million in the first year to help with the technical integration details.

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

The deal is subject to regulatory reviews, but the two companies expect to receive approval 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 in Canada and the United Kingdom.

Microsoft still has a long way to go to catch up with Google, which currently holds 85 percent of the global search market, according to Net Applications’ Market Share. In contrast, Bing holds a U.S. search market share ranging from 3 percent to 10 percent.

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