Yahoo & Microsoft expose fix together !!!

Yahoo and Microsoft have announced a long-rumoured internet search deal that will help the two companies take on chief rival Google.

This is a significant opportunity for us," Bartz said. "Microsoft is an industry innovator in search and it is a great opportunity for us to focus our investments in other areas critical to our future."

Microsoft will be able to incorporate Yahoo’s search technology, including it’s Panama ad-selling tool, but the companies will use Microsoft’s AdCenter sales tool and Bing search engine to power both sites.

As for the financial terms, there is not the large upfront payment once discussed, however Microsoft will offer both revenue guarantees to Yahoo as well as the lion’s share of the search advertising generated on Yahoo’s site.

Yahoo will get 88 percent of search revenue created by its sites during the first five years, while Microsoft will guarantee a certain level of search revenue for 18 months in each country. The companies expect it will take about two years after the deal is approved to fully get the partnership up and running.

Once fully in place, Yahoo said it expect the deal will boost its annual operating income by abut $500 million, while reducing capital expenditure by $200 million and increasing operating cash flow by about $275 million per year.

Aiming to head off privacy concerns, the two companies noted that "the agreement protects consumer privacy by limiting the data shared between the companies to the minimum necessary to operate and improve the combined search platform, and restricts the use of search data shared between the companies."

The deal must still pass regulatory muster and the two companies anticipate it will take several months to finalize. "Microsoft and Yahoo expect the agreement to be closely reviewed by the industry and government regulators, and welcome questions," the companies said. "The companies are hopeful that closing can occur in early 2010."

Microsoft and Yahoo are joining forces in search, but, in a line clearly aimed at regulators, the companies take pains to note that their collaboration is limited to that arena.

"The agreement does not cover each company’s Web properties and products, email, instant messaging, display advertising, or any other aspect of the companies’ businesses," they said. "In those areas, the companies will continue to compete vigorously."