Microsoft and Yahoo! pursued merger discussions in 2005, 2006, and 2007, that were all ultimately unsuccessful. At the time, analysts were skeptical about the wisdom of a business combination. On July 29, 2009, it was announced with a 10 year deal that Microsoft will have full access to Yahoo search engine to be used in Microsoft future projects for its search engine Bing. Under the deal, Microsoft was not required to pay any cash up front to Yahoo. The day after the deal was announced, Yahoo's share price declined more than 10% to $15.14, about 60% lower than Microsoft's takeover bid a year earlier.
The Microsoft and Yahoo! search deal has been announced and the internet is buzzing with information that leads even the slightest internet saavy individual to ponder on the deal. The big question is who will be the biggest winners and losers in this deal. It looks likely to help Microsoft but how will it affect Google and Yahoo!? The single biggest effect of the deal is that the now-separate auctions to place ads on the search engines of Microsoft and Yahoo will be combined. Since the two companies don’t have all the same customers, the total number of bidders will increase right away. And more bidders will be attracted to a marketplace that now has 30 percent of the search-ad inventory. More bidders for the same supply should lead to higher prices. That means more money for Microsoft and also for Yahoo!, which will get 88 percent of the revenue from searches on its sites.

But that doesn’t mean that Google will lose anything. It still has the largest marketplace, the best advertising technology and thus the highest revenue per search. Even if Microsoft earns more, the bids on Google won’t necessarily go down.
Signing Off,
JA







