European Union to Approve Microsoft, Yahoo Search Deal

By Clint Boulton  |  Posted 2010-02-15

The European Commission is expected to approve Microsoft and Yahoo's landmark, 10-year search deal designed to put a stop to Google's search dominance, according to Reuters.  

Any opposition to Microsoft and Yahoo's search agreement may have to come from the United States.

Microsoft and Yahoo last July announced a deal in which Microsoft's Bing search engine would power Yahoo's search engine.

Microsoft would pay its rival-turned-partner 88 percent of traffic acquisition costs-monies paid from search advertising partners-generated on Yahoo's sites during the first five years of the agreement.

Yahoo would retain the look and feel of its own search engine, which has been hemorrhaging market share and now sits at 17 percent, with Bing serving the results to users' queries. Microsoft's search ad platform would also replace Yahoo's own search ad engine.

Reuters said the European Commission, which oversees matters of corporate competition for the European Union, is expected to bless the deal. The EC gave itself a Feb. 19 deadline to approve or halt the deal.

The EC may also extend its review and seek remedies from the companies if it believes the transaction might hurt rivals or consumers. "I expect clearance without any concessions next Friday," Reuters reported, citing a source.

Microsoft declined to comment to eWEEK about the Reuters report.

This deal is crucial for Microsoft to accelerate its search market share, which has grown from 8 percent to 11.3 percent since the company launched Bing in June.

Microsoft and Yahoo's combined share would be 28 percent, still less than half of Google's 65.4 percent, according to the comScore figures for January 2010. Without Yahoo, Bing would take much longer to challenge Google.

Should the EC OK the Microsoft-Yahoo deal, the parties' fate would remain in the hands of the U.S. Department of Justice, which is also reviewing the deal. The Justice Department is examining Microsoft's investment in Bing, as well as details such as advertisement pricing.

The Association of National Advertisers in October filed a brief open letter pledging its support for the bid and asking the DOJ to swiftly bless it because it's good for the online advertising market.

Advertisers like the deal because they believe it may improve prices they pay to Google for search ads.

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