Microsoft-Yahoo Deal Could Expand Beyond U.S., Says Ballmer

Microsoft CEO Steve Ballmer told an audience in Tokyo that the Microsoft-Yahoo agreement over search-and-advertising could expand beyond the U.S. into worldwide markets. Although the deal is currently under evaluation by the U.S. Department of Justice, neither Microsoft nor Yahoo have publicly expressed concerns about whether it will successfully close in early 2010.

Microsoft CEO Steve Ballmer suggested during a trip to Tokyo that the search-and-advertising partnership between his company and Yahoo could expand beyond the United States into global markets.

"It's possible that we will extend that partnership [with Yahoo] outside the U.S.," Ballmer reportedly told a news conference, according to Reuters. "We will have to wait and see if we can get approval and consummate that partnership inside the U.S. first."

The agreement-which will have Microsoft's search engine, Bing, power Yahoo's search, while Yahoo handles worldwide sales for both companies' search advertisers-is still under evaluation by the U.S. Department of Justice. During a Sept. 22 event at NASDAQ MarketSite in Times Square, Yahoo CEO Carol Bartz suggested that the process was moving with no issues.

"We don't expect any[thing] different than we did in July," Bartz told the audience of reporters, referring to the date of the agreement's announcement. "We still expect it to close in early 2010."

Microsoft has acknowledged that the Justice Department is looking into the agreement, but declined repeatedly to share details.

"As expected, Microsoft and Yahoo have received requests for additional information about the agreement," Jack Evans, a Microsoft spokesperson, said in a statement e-mailed to eWEEK on Sept. 11. "As we said when the agreement was announced, we anticipated that this deal will be closely reviewed and we are hopeful it will be approved in early 2010."

The agreement will theoretically allow both companies to better compete against Google, which currently dominates the online search-and-advertising space. With the deal in place, Bing's market share could increase from its current 8.4 percent to nearly 30 percent, if Yahoo's current search-engine share of roughly 19.6 percent is ported over to Bing's with no attrition. In theory, that would present a stronger challenge to Google's 65 percent share of the market.

The agreement is also currently under evaluation by the European Union.

"There are ongoing informal discussions between the European Commission and Microsoft and Yahoo on their search engine partnership," an unnamed source told Reuters on Sept. 15.

"We said back in July when we announced the agreement that we would be discussing the agreement with the European Commission," Microsoft spokesperson Jack Evans confirmed to eWEEK soon after that Reuters report. "Those discussions continue."

Microsoft has already spent several months wrestling with European antitrust regulators over a number of issues, particularly whether Internet Explorer 8 could be bundled with Windows 7. Microsoft decided in August that it will release a version of Windows 7 in Europe that includes Internet Explorer 8 but offers users a "ballot screen" that will allow them to select the Internet browser of their choice.

A Bloomberg report published in July suggested that Microsoft is trying to wrap up its European antitrust investigations before EU Competition Commissioner Neelie Kroes steps down from office at the end of this year.