Yahoo and Microsoft are set to continue their revenue per search agreement they have had for a decade now. As revealed by a Securities and Exchange Commission (SEC) filing, Microsoft has agreed to let Yahoo earn revenue through its search for at least one more year. The deadline for the agreement currently signed by the two tech giants is valid until the 1st of April next year. Till then, both companies will work in tandem to maximize their revenues through search.
However, the news came with a pinch of salt for Microsoft. Even after agreeing to extend their deal, Microsoft learned that Yahoo’s CEO, Marissa Mayer plans to discontinue their association once the current agreement is completed. This is surprising as the agreement for revenue per search between the two companies was made long before Mayer took the reins at Yahoo. Obviously, there aren’t any clear signs from either party as to what is going to be the future of their agreement.
After all, the deal benefits both of them. Microsoft only lets Yahoo enjoy the revenue per search as it earns on their behalf as well. According to an august official at Yahoo, the current agreement between the two companies is worth at least $50 to $60 million for the company. Having seen revenue dip in other areas of its business, Yahoo would be keen to recover the money it has lost through whichever medium is the most profitable. Needless to say, search has been a hot commodity for some time now.
Yet, that figure also takes into account the fact that Yahoo search is powered by Bing. Originally, the agreement was far more lucrative and profitable for Yahoo back when it was powering its search engine on its own. In 2010 however, a new agreement was made between the companies which stipulated that Yahoo search would be powered by Bing. This meant that Bing provides the search results whenever a person searches for anything on Yahoo.
So, there has been a definite drop in revenue per search for Yahoo. Previously, the company was earning a significantly higher amount. This is the reason why Mayer, among other top officials of the company, wants to discontinue the agreement. Microsoft, on the other hand, has no reason to do away with the deal. It is benefiting by being in control of the no. 2 and no. 3 search engine in the world. Beating Google might be impossible by Microsoft at least has a significant share of the search market.
Talking about Google there are reports that the company is waiting to pounce on Yahoo if and when the deal with Microsoft ends. This would give Google unprecedented power over the search market. Already, there is seemingly no way to challenge Google’s dominance. Being in control of Yahoo as well as its own search engine would mean that Google will hold the cards as far as the search industry is concerned. This is something Microsoft would be wary of and one of the reasons why they want to continue the revenue per search agreement.
[Image via cnet]