Yahoo Spells Out Plans to Use Google to Power Search Results

A revenue–sharing agreement between the two companies follows amendment of Yahoo's similar, but exclusive pact with Microsoft.

Yahoo, Google partnership

Some Internet users conducting search queries on Yahoo's search service will have Google serving up their results in the background under an agreement between the two companies earlier this week.

In a regulatory filing Oct. 20, Yahoo described the services agreement as one under which Google will provide text and image search services to Yahoo users on both mobile and desktop platforms. Google will also provide Yahoo with targeted search advertisements via Google AdSense for Search, the regulatory filing noted.

The agreement, which runs through Dec. 31, 2018, gives Yahoo the right to use Google's services on its properties in the United States as well as in all of the other countries where it owns or operates its own Websites, or syndicates them through partners.

Not all of the search queries that users conduct on Yahoo will be routed through Google. Instead, Yahoo will have the discretion to select the queries that are sent to Google. The agreement does not require Yahoo to commit to sending a minimum number of search queries to Google and allows Yahoo to enter into similar arrangements with other Internet search and service providers if it chooses.

"The Services Agreement is non-exclusive and expressly permits Yahoo to use any other search advertising services, including its own service, the services of Microsoft Corporation or other third parties," the agreement said.

Yahoo will receive a percentage of the revenues that Google generates from the targeted ads served up on Yahoo's sites and those of its affiliates. The amount that Yahoo receives will vary based on factors such as whether the ads are displayed on U.S. or non-U.S. sites and whether they are displayed on desktop or mobile devices.

The agreement requires Yahoo, in turn, to pay Google for the image and search results that it requests from the latter.

Yahoo's agreement with Google follows the company's decision earlier this year to amend a similar, but exclusive pact it had signed with Microsoft back in 2009. The original agreement gave Microsoft exclusive rights to provide algorithmic search services to Yahoo under a revenue-sharing arrangement similar to the one that Yahoo now has with Google. The amended agreement with Microsoft frees Yahoo to choose other partners to deliver algorithmic search and image results on desktop and mobile platforms.

In partnering with Google, Yahoo has aligned itself with, by the far, the most successful company in the search business.

Search engine rankings for September released last week by Internet analytics firm Comscore show Google holding a dominating 63.9 share of the U.S. desktop search marketplace, compared with Yahoo's 12.6 percent share. Yahoo's former exclusive search services partner Microsoft accounts for about 20.7 percent of the market.

Market research firm eMarketer expects Google to take 55 percent of the estimated $81.9 billion that will be spent on search ad dollars globally in 2015. China's Baidu is expected to come in second place, with an 8.8 percent market share followed by Microsoft with 4.2 percent. eMarketer expects that Yahoo will close the year with a 2.3 percent share globally.

Search revenues continue to be a huge part of Yahoo's business, accounting for $870 million, or about 73 percent, of the $1.2 billion in revenues the company reported in the third quarter of 2015. Ad display revenues at $509 million accounted for about 43 percent of Yahoo's overall revenues.

Jaikumar Vijayan

Jaikumar Vijayan

Vijayan is an award-winning independent journalist and tech content creation specialist covering data security and privacy, business intelligence, big data and data analytics.