A new provision in the renewed search agreement between Microsoft and Yahoo gives either company the ability to end the deal at any point after Oct. 1 of this year by simply sending written notice.
The escape clause was disclosed in a regulatory filing by Yahoo overnight, which revealed the terms of the agreement in more detail than the companies provided when they announced the renewal publicly last week. Under the original deal, reached in 2010, Yahoo needed to show that the deal wasn’t meeting financial benchmarks to be able to terminate the agreement.
It’s more evidence of Yahoo CEO Marissa Mayer and Microsoft CEO Satya Nadella giving the companies far more flexibility than their predecessors, Carol Bartz and Steve Ballmer, originally negotiated.
The new filing reads, “Pursuant to the Amendment, on or after October 1, 2015, either Yahoo or Microsoft may terminate the Search Agreement by delivering a written notice of termination to the other party.” It notes that the agreement “will remain in effect for four months from the date of the termination notice to provide for a transition period.”
Under the new deal, announced last week, Yahoo will no longer be required to exclusively use Microsoft Bing to power its search results on desktop computers. The agreement had already been non-exclusive on mobile.
The companies said in a joint news release that “Yahoo will continue to serve Bing ads and search results for a majority of its desktop search traffic,” but the deal gives Yahoo “increased flexibility to enhance the search experience on any platform.”
The regulatory filing goes into more detail, spelling out Yahoo’s minimum obligation to use Microsoft’s search results: “Commencing on May 1, 2015, Yahoo agrees to request paid search results from Microsoft for 51% of its search queries originating from personal computers accessing Yahoo Properties and its Affiliate sites (the “Volume Commitment”) and will display only Microsoft’s paid search results on such search result pages.”
Microsoft and Yahoo said previously that, under the new deal, Yahoo’s salesforce will no longer have an exclusive lock on premium search advertising for both companies, as it did under the original agreement. Under the new deal, Microsoft’s salesforce will sell Bing ads, and Yahoo’s salesforce will sell Yahoo ads.
Microsoft and Yahoo struck the deal in 2009, after then-Microsoft CEO Steve Ballmer tried unsuccessfully to buy Yahoo with an unsolicited acquisition bid. Microsoft has since become the No. 2 search provider in the U.S., behind Google. Even without counting the Yahoo search traffic, Microsoft Bing surpassed 20 percent market share in the U.S. for the first time in March.
Yahoo’s U.S. search market share has declined from 17 percent in 2009 to 13 percent on the desktop as of earlier this year, according to Comscore.