John Paczkowski

Recent Posts by John Paczkowski

Microsoft-Yahoo Alliance Cleared by DOJ, EU

At long last, Microsoft and Yahoo are free to consummate their search alliance. The companies announced Thursday that the 10-year agreement they negotiated last summer has been approved without restrictions by the U.S. Department of Justice and the European Commission.

Implementation of the deal, which will see Microsoft’s Bing powering Yahoo searches and Yahoo handling sales of search ads for both companies, is “expected to begin in the coming days.” The companies have set a goal of completing it in the U.S. by the end of 2010.

It is worth noting that while Yahoo (YHOO) is transitioning its algorithmic and paid search platforms to Microsoft (MSFT), the search user experience is still its responsibility. In other words, this deal is no quick panacea, and Yahoo must remain on point and innovating if it is to make the most of the alliance.

Anyway, approval of the deal in the U.S. and abroad was clearly a relief to both companies, and Yahoo CEO Carol Bartz and Microsoft CEO Steve Ballmer applauded it in dueling banjo remarks.

“This breakthrough search alliance means Yahoo! can focus even more on our own innovative search experience,” Bartz said. “Yahoo! gets to do what we do best: combine our science and technology with compelling content to build personally relevant online experiences for our users and customers.”

Ballmer was equally enthusiastic. “Although we are just at the beginning of this process, we have reached an exciting milestone,” he said. “I believe that together, Microsoft and Yahoo! will promote more choice, better value and greater innovation to our customers as well as to advertisers and publishers.”

Yahoo! and Microsoft to Implement Search Alliance
Completion of U.S., European Review Clears Way for Agreement to Move Forward

SUNNYVALE, Calif. & REDMOND, Wash., Feb 18, 2010 — Microsoft and Yahoo! announced today that they have received clearance for their search agreement, without restrictions, from both the U.S. Department of Justice and the European Commission, and will now turn their attention to beginning the process of implementing the deal.

Implementation of the deal is expected to begin in the coming days and will involve transitioning Yahoo!’s algorithmic and paid search platforms to Microsoft, with Yahoo! becoming the exclusive relationship sales force for both companies’ premium search advertisers globally. Once the transition is completed, the companies’ unified search marketplace will deliver improved innovation for consumers, better volume and efficiency for advertisers and better monetization opportunities for web publishers through a platform that contains a larger pool of search queries.

“This breakthrough search alliance means Yahoo! can focus even more on our own innovative search experience,” said Yahoo! Chief Executive Officer Carol Bartz. “Yahoo! gets to do what we do best: combine our science and technology with compelling content to build personally relevant online experiences for our users and customers.”

Microsoft CEO Steve Ballmer concurred with Bartz’s assessment. “Although we are just at the beginning of this process, we have reached an exciting milestone,” Ballmer said. “I believe that together, Microsoft and Yahoo! will promote more choice, better value and greater innovation to our customers as well as to advertisers and publishers.”

Consumer Search Experience

Under terms of the agreement, which was announced in late July 2009, Microsoft will provide Yahoo! with the same search result listings available through Bing, and Yahoo! will innovate around those listings by integrating rich Yahoo! content, enhanced listings with conveniently organized information about key topics, and tools to tailor the experience for Yahoo! users.

Yahoo! will focus on providing a compelling and innovative search experience that allows people to find and explore the things, people and sites that matter most to them. While Microsoft will provide the underlying platform, both companies will continue to create different, compelling and evolving experiences, competing for audience, engagement and clicks.

Transition Timeline

Yahoo! and Microsoft will work with advertisers, publishers and developers on a customized plan designed to make the transition as efficient and seamless as possible. Both companies will begin working closely with most partners well in advance of their planned transition to the Microsoft platform and will communicate important information to partners about the transition periodically via phone, email, webinars and a newly created website at www.searchalliance.com.

The companies will begin the transition of algorithmic search and have set a goal of completing that effort in at least the United States by the end of 2010. The companies also hope to make significant progress transitioning U.S. advertisers and publishers prior to the 2010 holiday season, but may wait until 2011 if they determine that the transition will be more effective after the holiday season. All global customers and partners are expected to be transitioned by early 2012.

Customer Relationships

Once the transition is in place, Yahoo! and Microsoft will each represent and provide customer support to different advertiser segments. Yahoo!’s sales team will exclusively represent and support high volume advertisers, SEO and SEM agencies, and resellers and their clients. Microsoft will represent and support self-service advertisers.

Regulatory Summary

Although the transaction previously was cleared by regulators in Australia, Brazil and Canada, the terms of the agreement required clearance by U.S. and European regulators before it could commence. Meanwhile, Microsoft and Yahoo! continue to work with regulators in Korea, Taiwan, and Japan to ensure that they have all relevant information necessary to evaluate the transaction before the deal commences in those specific jurisdictions.


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik