Under a revised search agreement between Microsoft and Yahoo, Microsoft will exclusively take over marketing for ads delivered via Bing while Yahoo will continue selling ads for its Gemini ads platform. The new deal, which revises one first inked in 2009, will also give Yahoo more flexibility on how it deploys search for both desktop and mobile devices.
"Integrating the sales teams with those responsible for engineering will allow both companies to service advertisers more effectively," according to Yahoo. The companies plan to begin the transition of ad sales responsibilities sometime this summer.
Under the 10-year partnership first reached by former CEOs Steve Ballmer of Microsoft and Carol Bartz of Yahoo, Microsoft agreed to be Yahoo's exclusive desktop provider of paid and algorithm-driven searches. The deal also called for Microsoft to pay Yahoo a portion of the revenues generated by Bing ads delivered via Yahoo searches, and that arrangement is expected to continue under the new terms.
Deadline Was Approaching
Bartz was succeeded by Marissa Mayer (above left) in 2012, and Satya Nadella (above right) was named Microsoft's CEO in early 2014, less than six months after Ballmer announced his plans to retire.
After Ballmer's announcement, the Microsoft-Yahoo partnership began showing signs of fraying as Yahoo executives raised questions about Redmond's commitment to the agreement. Yahoo made several attempts to put the partnership on ice, but both an arbitrator and a U.S. District Court judge ruled in Microsoft's favor.
Yahoo had the option of separating from its partnership with Microsoft after five years and, as recently as last month, the prospects for a continued relationship between the two companies remained uncertain. In a filing with the U.S. Securities and Exchange Commission on March 23, Yahoo indicated it was extending the deadline for exiting the partnership by 30 days, until April 24.
Search 'Still in Infancy'
"The agreement opens up significant opportunities in our partnership, enabling both partners to improve the search experience, create value for advertisers, and establish ongoing stability for partners," Mayer wrote about the new deal in a blog post on Thursday. "We firmly believe that search is still in its infancy -- and this partnership marks the next chapter in our exploration of how to make search truly great. . . . Search has, and will continue to be, an incredibly important part of Yahoo, and this new partnership represents a major step forward in our renaissance."
Mayer thanked Nadella and the Microsoft team for working to "rejuvenate our partnership." In a separate statement, Nadella added, "Our global partnership with Yahoo has benefited our shared customers over the past five years and I look forward to building on what we've already accomplished together."
Yahoo has made no secret about its desire to reinvigorate its position in the search landscape. In November, for example, it announced a five-year partnership with Mozilla to make Yahoo the default search engine for desktop and mobile users in the U.S. The company added that deal was its most significant partnership in five years.
According to the March 2014 search engine rankings from comScore, Microsoft sites saw a 0.2 percent increase in U.S. market share -- to 18.6 percent -- compared to the same month in 2013, while Yahoo sites saw their share decline by 0.2 percent, to 10.1 percent. Google sites remain the search leader, retaining a market share of 67.5 percent.