Yahoo CEO Marissa Mayer and Microsoft CEO Satya Nadella have revised the landmark search alliance struck by their predecessors nearly six years ago — loosening the ties between the companies in the process.
“Over the past few months, Satya and I have worked closely together to establish a revised search agreement that allows us to enhance our user experience and innovate more in our search business,” Mayer said in a statement. “This renewed agreement opens up significant opportunities in our partnership that I’m very excited to explore.”
Under the new deal, announced this morning, Yahoo will no longer be required to exclusively use Microsoft’s Bing to power its search results on desktop computers. The agreement had already been non-exclusive on mobile.
The companies say 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.”
In addition, 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.
The companies say the underlying economic structure of the deal remains the same, with Microsoft paying Yahoo a percentage of Bing ad revenue from Yahoo search results.
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.
“Our global partnership with Yahoo has benefited our shared customers over the past five years and I look forward to building on what we’ve already accomplished together,” Nadella said in a statement. “Our partnership with Yahoo is one example of the diverse partnerships we’ll continue to cultivate in order to have the greatest impact for our customers.”
Mayer, a former Google executive, was not happy with the original terms of the Microsoft-Yahoo alliance and has reportedly been seeking to end or revise the agreement after becoming Yahoo CEO in 2012.
