Yahoo, Microsoft amend search partnership

With the amendment of a 2009 search partnership between Microsoft and Yahoo, the software giant gave up some control over how search results were displayed on desktops and mobile devices.

Under the 10-year search partnership entered into by former Microsoft CEO Steve Ballmer and former Yahoo CEO Carol Bartz, the two companies could amend or terminate it after five years.

The companies extended the deadline by 30 days last month to renegotiate the deal.

Microsoft earlier controlled how Bing displayed search results on Yahoo websites accessed on PCs.

Microsoft would now own the ads delivered from its own Bing Ads platform.

Yahoo was responsible for sales for Bing search ads and starting this summer the two companies plan to transition sales responsibilities.

The deal originally also included a revenue-sharing agreement where Microsoft paid Yahoo a percentage of Bing ads revenue delivered from Yahoo searches. According to the companies, that structure would remain intact.

Shares in the companies moved down marginally in late-morning trading.

Amendment improves partnership, accelerates innovation and increases agility in market

Microsoft said in a press release that the companies amended their search partnership to improve the search experience, create value for advertisers and establish ongoing stability for partners. The update reaffirms commitments made by both companies in the original 2009 agreement, while implementing changes to keep the partnership strong and productive, with both companies committed to maximizing the alliance.

''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,'' said Satya Nadella, CEO, Microsoft Corp. ''Our partnership with Yahoo is one example of the diverse partnerships we'll continue to cultivate in order to have the greatest impact for our customers.''

''Over the past few months, Satya 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 Marissa Mayer. ''This renewed agreement opens up significant opportunities in our partnership that I'm very excited to explore.''

The update includes improvements in two core areas. First, Yahoo will now have increased flexibility to enhance the search experience on any platform, since the partnership is non-exclusive for both desktop and mobile. Yahoo will continue to serve Bing ads and search results for a majority of its desktop search traffic.

Second, the update increases agility and sales focus. Microsoft will become the exclusive sales force for ads delivered by Microsoft's Bing Ads platform, while Yahoo will continue to be the exclusive sales force for Yahoo's Gemini ads platform.

Integrating the sales teams with those responsible for engineering will allow both companies to service advertisers more effectively. Microsoft and Yahoo plan to begin to transition managed advertiser sales responsibilities this summer.

The partnership, formed in 2009 by both CEOs' predecessors, established a transformative relationship between the two companies - one where Microsoft exclusively provided paid and algorithmic search services on PC to Yahoo. The alliance also designated a revenue sharing agreement where Microsoft pays Yahoo a percentage of Bing Ads revenue delivered from Yahoo searches. This existing underlying economic structure remains unchanged with today's updates.