Microsoft and Yahoo shake up their search deal

Tweaked agreement gives Yahoo more flexibility, possibly in images or mobile

Image credit: REUTERS/Pascal Lauener

Nearly six years after Microsoft and Yahoo inked a search partnership, the companies are extending their agreement while changing it up a bit, as well.

The companies announced today that they have amended their search partnership. However, the deal now notes that Yahoo will have more flexibility to update its "search experience" on any platform.

Yahoo reported that it will continue to serve Bing ads and search results for a majority of its desktop search traffic. The company did not specify whether Bing ads and search will be used for the majority of its mobile search traffic.

The new agreement also notes that the two companies' sales teams will be integrated with their engineering teams to better meet advertiser demand.

"Over the past few months, [Microsoft CEO Satya Nadella] and I have worked closely together to establish a revised search agreement that allows us to enhance our user experience and innovate more in our search business," said Yahoo CEO Marissa Mayer. "This renewed agreement opens up significant opportunities in our partnership that I'm very excited to explore."

In 2009, Microsoft and Yahoo launched the initial deal that called for Microsoft's Bing search engine to do all of the search work for Yahoo's site. That agreement also called for Yahoo to sell premium search advertising services for both companies.

Analysts said at the time that the two companies were joining forces to better take on search foe Google, which dominates the market.

Neither Yahoo nor Microsoft Bing have put major dents in Google's search share, however.

Zeus Kerravala, an analyst with ZK Research, said the new agreement could give Yahoo the flexibility it needs to try more options that draw in new search users. "It looks like this means Yahoo will be able to take those search results and use them in different ways," he said. "For example, it could potentially sell [results to] another site... or Yahoo could build it into different portals or mobile applications. It could be a way of boosting revenue."

The latest agreement also could allow Yahoo to use Bing for different kinds of searches, according to Ezra Gottheil, an analyst with Technology Business Research.

Instead of using Bing for just typical searches --o is Aaron Hernandez?" or "What is a gyrocopter? -- Yahoo could put more focus on image or social searches. And with users increasingly searching on the go, Yahoo could very well be looking to do more for mobile users.

Gottheil also noted that the agreement will benefit Microsoft.

"First, I think Yahoo has something up its sleeve, either in search or packaging of search," he said. "And Microsoft is going to be making Bing kind of ubiquitous on Windows 10. If people like what Bing does there, they may choose Yahoo as a place to leverage what Bing has learned about them on Windows 10. It helps both companies."

Copyright © 2015 IDG Communications, Inc.

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