Microsoft will pay Yahoo some $150 million in expenses once the two companies’
search-and-advertising deal finally closes, according to reports circulating
online, while a Yahoo executive suggested that his company is already deciding
which engineers will be shifted over to Microsoft.
Yahoo’s identifying the engineers to transfer to its new
partner has apparently been underway for some time. "We are well down the line;
we have dedicated teams running the search business and running the transition
of the search business," Yahoo chief financial officer Tim Morse said during the
Barclays Capital Global Technology Conference on Dec. 9, according to MarketWatch.
Some 400 engineers will eventually be transferred between
Microsoft and Yahoo as part of the original search-and-advertising agreement,
according to previous announcements by both companies.
According to an Associated
Press report, Microsoft may also accelerate its payment of $150 million due
to Yahoo, which will collect that whole sum by June 30, dependent on whether the
deal has closed by that point. Terms of the agreement originally released over
the summer had Microsoft paying an annual $50 million for three years to
Yahoo.
When reached for comment by eWEEK, a Microsoft spokesperson
e-mailed: "As these are Yahoo’s filings, Microsoft is not commenting on
them."
Microsoft
and Yahoo announced the finalization of their search-and-advertising deal late
on Dec. 4, positioning Microsoft and its search engine, Bing, to challenge
Google in a more head-on manner in 2010. Under the terms of the deal, Bing will
become the back-end search engine for all Yahoo’s sites, even as Yahoo’s team
takes over worldwide sales duties for both companies’ search
advertisers.
The deal represents the possibility for Microsoft to
challenge Google more directly, since combining Bing’s current market share with
Yahoo’s would give it roughly 30 percent of the existing U.S. search engine
market. Microsoft CEO Steve Ballmer suggested during a trip to Tokyo in November
that the Microsoft-Yahoo deal could potentially expand beyond U.S. borders into
a global partnership.
While the deal is still under examination by the U.S.
Department of Justice for any possible antitrust violations, neither Microsoft
nor Yahoo have expressed concern about the deal being scuttled by the
government.
"We don’t expect any[thing] different than we did in July,"
Yahoo CEO Carol Bartz said during a Yahoo event at NASDAQ MarketSite in New York
City’s Times Square on Sept. 22. "We still expect it to close in early
2010."
Despite the partnership, Yahoo has taken steps since the
deal’s July announcement to assert its continued viability. During an Aug. 24
press conference, Yahoo executives suggested that, although Bing is now handling
their company’s search processes, they will continue to fight for end users by
improving on core features such as Yahoo Messenger, Yahoo Mail, Yahoo Search and
other programs.
Under the terms of the 10-year agreement, Yahoo
can escape from the contract with Microsoft if Google’s RPS (revenue-per-search)
query rate becomes higher than the combined RPS rates of Microsoft and
Yahoo. If, after five years, Yahoo’s RPS rate in the United States dips
beneath a percentage of Google’s estimated RPS on a 12-month average, Yahoo can
also terminate the contract.
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