Yahoo Modifies Search Partnership with Microsoft's Bing - Analyst Blog
Internet giant Yahoo! Inc. YHOO extended and revamped its 6-year old original search alliance with software developer Microsoft Corporation MSFT, in which Microsoft offers the tools for Web search results and shares ad revenues with Yahoo!.
The deal follows months of negotiation, which probably created friction between the two companies. The revamped agreement basically aims at greater flexibility to improve the search services on any platform and how the advertising teams are handled.
Under the amended agreement, Yahoo will gain more control over the presentation of the search results on desktops and mobile devices. Also, Yahoo! will have the liberty to work with other partners in search and also take greater power of ad sales on its own web sites. It will no longer be bound to use Microsoft to serve all the ads on desktop searches.
Also, Microsoft will gain rights to vend ads delivered by its Bing ads platform and manage the relationships with advertisers for its Bing search service, while Yahoo will carry on selling ads on its Gemini platform.
The relationship between the two tech giants started back in 2009 when they entered into a 10-year deal, which expires in 2020, per which Microsoft's Bing search engine would provide search results for Yahoo!’s customers on desktop PCs. Also, the association designated a revenue sharing agreement where Microsoft shared with Yahoo a percentage of Bing Ads revenue generated from the Yahoo searches.
Yet, the two together couldn’t surpass the search giant Google Inc. GOOG. As per ComScore., Google held 64% of the U.S. desktop search market share in March, while the companies together lagged behind with a combined 32.8% of all U.S. desktop Web searches. Microsoft and Yahoo! individually had 20% and 13% of the market share. However, it is an improvement from last year when Google had 67.5%, Microsoft 18.6% and Yahoo 10.1%.
Yahoo!’s CEO Marissa Mayer has been making efforts to boost Yahoo! search market share and break Google's dominance over Internet searches. In December, Yahoo! had a major win, as it replaced Google as the default search engine for the Firefox web browser for the next five years in the U.S. on both mobile devices and desktops.. The move will ramp up its search business, search engine market share and advertising business, thereby boosting its revenues.
Mayer is also trying to displace Google as the default option on Apple's AAPL Safari browser, which is the standard browser on the iPhone and iPad.
Both Yahoo and Microsoft hold a Zacks Rank #3 (Hold).
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