Yahoo reaches search deal with Google after loosening Microsoft ties

Yahoo CEO Marissa Mayer. (GeekWire File Photo)
Yahoo CEO Marissa Mayer was previously a Google exec. (GeekWire File Photo)

Updated below with Microsoft statement.

Yahoo just announced a search deal with Google, taking advantage an earlier revision of its longtime Microsoft search pact that gave Yahoo the ability to use alternative services to power its Internet search and advertising services.

The deal between Google and Yahoo was disclosed a short time ago in a regulatory filing by Yahoo. Under the arrangement, Google will provide web search results, search ads and image search services for an unspecified number of Yahoo user queries, on both desktop and mobile platforms.

According to the regulatory filing, the non-exclusive deal allows Yahoo to continue working with Microsoft, as well.

Here’s an excerpt from the filing describing Yahoo’s agreement with Google.

On October 19, 2015, Yahoo! Inc., a Delaware corporation (“Yahoo”), and Google Inc., a Delaware corporation (“Google”), entered into a Google Services Agreement (the “Services Agreement”). The Services Agreement is effective as of October 1, 2015 and expires on December 31, 2018. Pursuant to the Services Agreement, Google will provide Yahoo with search advertisements through Google’s AdSense for Search service (“AFS”), web algorithmic search services through Google’s Websearch Service, and image search services. The results provided by Google for these services will be available to Yahoo for display on both desktop and mobile platforms. Yahoo may use Google’s services on Yahoo’s owned and operated properties (“Yahoo Properties”) and on certain syndication partner properties (“Affiliate Sites”) in the United States (U.S.), Canada, Hong Kong, Taiwan, Singapore, Thailand, Vietnam, Philippines, Indonesia, Malaysia, India, Middle East, Africa, Mexico, Argentina, Brazil, Colombia, Chile, Venezuela, Peru, Australia and New Zealand.

Under the Services Agreement, Yahoo has discretion to select which search queries to send to Google and is not obligated to send any minimum number of search queries. The Services Agreement is non-exclusive and expressly permits Yahoo to use any other search advertising services, including its own service, the services of Microsoft Corporation or other third parties.

The regulatory filing notes that Yahoo and Google “have agreed to certain procedures with the Antitrust Division of the United States Department of Justice” to review the agreement, “including delaying the implementation of the Services Agreement in the U.S. in order to provide the DOJ with a reasonable period of review.” Antitrust problems nixed an earlier ad deal reached by Google and Yahoo in 2008.

Yahoo, which just reported quarterly earnings that fell short of analyst expectations, says in a news release that the deal provides Yahoo “with additional flexibility to choose among suppliers of search results and ads. Google’s offerings complement the search services provided by Microsoft, which remains a strong partner, as well as Yahoo’s own search technologies and ad products.”

Yahoo’s deal with Microsoft, which was reached by then-CEOs Carol Bartz and Steve Ballmer more than six years ago, was revised by Yahoo CEO Marissa Mayer and Microsoft CEO Satya Nadella earlier this year. The revision ended the exclusive arrangement between Yahoo and Microsoft on the desktop, allowing Yahoo to explore partnering with others, as well. Mayer was a Google executive before joining Yahoo as CEO.

Google continues to dominate the U.S. search market, with nearly 64 percent of queries as of last month, compared to 20.7 percent for Microsoft and 12.6 percent for Yahoo, according to the latest ComScore data. Yahoo’s share has slipped significantly since striking the original deal with Microsoft.

Update, 3 p.m.: Microsoft offered this statement in response to our inquiry: “We remain committed to the Yahoo syndication partnership and will continue to serve the majority of Yahoo traffic as outlined in our contract extension. Yahoo is a valued partner and we look forward to continuing to serve our advertising customers through the Bing Ads marketplace.”


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