LONDON: Tech giants Yahoo and Microsoft have mutually agreed to extend re-negotiation deadline of the search deal between the two by 30 days.
Yahoo and Microsoft have failed to make progress in their renegotiation of a 10-year search deal that was made by the former bosses of the two firms in an attempt to rival Google.
In July 2009, Microsoft and Yahoo signed a 10-year deal following Microsoft’s decision against buying Yahoo for $45 billion, as then-CEO Steve Ballmer had proposed back in 2008. The 2009 deal specified that Microsoft would power Yahoo search, and Yahoo become the ad sales force for Microsoft’s premium properties.
The deal also included a clause that gave Yahoo the option to exit the partnership at the five-year mark, in February 2015, if Yahoo’s 12-month average revenue-per-search (RPS) in the U.S. was less than a certain percentage of Google’s estimated RPS.
Microsoft has been compensating Yahoo for the RPS shortfall over the past few years. In December 2013, Yahoo reportedly admitted it had garnered 31 percent of its quarterly earnings from Microsoft — substantially more than the 10 percent Yahoo previously had claimed publicly.
Yahoo has been working on a variety of search-related projects as a way to keep its hand in the search space. CEO Marissa Meyer has been up front about distaste for the Microsoft deal. Microsoft execs, for their part, claim the relationship between the two has stabilized over time.
Microsoft has been using its search partnership with Yahoo to grow its Web-search market share. But Microsoft, in the meantime, also has been integrating Bing into more and more of its products and services, as well as into Windows SKUs like Windows with Bing, in an attempt to increase usage of Bing indirectly.
Microsoft officials said earlier this year that they believe Bing will be profitable by the second half of calendar 2015.
