Yahoo Prepping Engineers for Microsoft Partnership, Will Take $150 Million

Microsoft will pay Yahoo some $150 million by June 30, as opposed to giving out an annual $50 million over three years, if the search-and-advertising agreement between the two companies closes by June 30, 2010, according to reports. Meanwhile, a Yahoo executive claimed during a speech at Barclays Capital Global Technology Conference that Yahoo was already preparing certain engineers to be transferred over to Microsoft, per the agreement.

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.