Yahoo! Inc. (NASDAQ:YHOO) signed a 10 year search deal with Microsoft Corporation (NASDAQ:MSFT) five years back with an option to reconsider the deal after completion of 5 years. Since Marissa Mayer took over as CEO of Yahoo! Inc. (NASDAQ:YHOO) she was unhappy with the terms of the deal and many expected that Mayer would cut off the search deal with Microsoft Corporation (NASDAQ:MSFT). But both the companies announced on Thursday about the search deal being improved. CNBC’s David Faber reported on CNBC about this new improved deal between Yahoo! Inc. (NASDAQ:YHOO) and Microsoft Corporation (NASDAQ:MSFT).
Yahoo! originally signed the search partnership with Microsoft in order to better compete against the like of Google Inc (NASDAQ:GOOGL) who dominate the search market. But the deal did not seem to improve the search market share of either company. What’s in the new deal that could possibly be helping both Yahoo! and Microsoft for their future growth?
Faber reported that Yahoo! had a long running search deal with Microsoft through which Microsoft provided search on the Yahoo! platform. He said that both the companies came out with announcement that they have amended that search partnership. He added that the companies claim the new improved partnership to accelerate innovation and increase agility and flexibility for both Yahoo! and Microsoft.
Faber also talked about the key features of the new improved partnership. He said that the improvement will feature in two core areas. He mentioned that according to this new deal Yahoo! will not have increased flexibility doing hands research experience on any platform, which the deal calls as non-exclusive for both desktop and mobiles. According to the new deal Microsoft will become the exclusive sales force for ads delivered by their bing ad platform.
“[…] They say the update includes improvements in two key areas. First Yahoo! will now have increased flexibility doing hands research experience on any platform and remember its not exclusive for both desktop and mobile. They will continue to serve bing ads and search results for majority of desktop search traffic, as well, Microsoft will become the exclusive sales force for ads delivered by their bing ad platform. Just unclear exactly if that means there have been a previous arrangement that needs reduction in some way in position that Yahoo! had in terms of selling these ads. So we will see,” Faber reported.
Faber said that the terms of the deal is still unclear if is there any change in the position of Yahoo! in selling these ads or not. He pointed out that Yahoo! is mainly focused on improving its cost structure and he feels that they are trimming the expenses due to continued pressure from activist investor Jeffrey Smith.
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