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Microsoft’s partnership with Yahoo in Internet search and advertising has hit a bump, with Yahoo CEO Carol Bartz saying on the company’s earnings call yesterday afternoon that “technical limitations” Microsoft’s adCenter are resulting in fewer clicks than expected on ads next to search results, and impacting Yahoo’s revenue.

In the meantime, she said, Yahoo is holding off on adopting adCenter in international markets. The company is currently using adCenter in the U.S. under the Microsoft partnership.

“We are working very close with Microsoft on this,” Bartz said on the call, according to the transcript. “They understand the issues and they’re hard at work on systems architecture, science models and better features and functions in adCenter. They have an aggressive roadmap to bring those to the marketplace.”

Danny Sullivan of Search Engine Land offers an alternative take in this extensive analysis, including the theory that better organic search results from Bing are part of the issue, resulting in fewer clicks on the related search ads.

Microsoft confirms it’s working with Yahoo to address the revenue issue, according to a statement provided by the company to Mary Jo Foley of ZDNet. Microsoft cited progress in some areas, and added, “We remain optimistic about the long-term potential of the combined search marketplace and are working collaboratively with Yahoo to identify real-time insights and create optimizations strategies for our customers and partners.”

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