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Yahoo Filing Reveals Details of Microsoft Deal 65

Posted by Soulskill
from the all-chairs-must-be-bolted-to-the-ground dept.
CWmike writes "Microsoft will pay Yahoo $50 million a year for three years and will hire at least 400 Yahoo employees as part of the companies' recent search agreement, according to a filing with the US Securities and Exchange Commission. Yahoo's form 8-K, which appeared online on Tuesday, reveals a few additional details about the agreement. The deal, announced last week, will mean that Microsoft's Bing search engine will power Yahoo's search site and Yahoo will sell premium search ad services for both companies. Five years into the 10-year agreement, Microsoft can opt out of the exclusive engagement for Yahoo's ad sales services, according to the filing. If it does, Yahoo will then keep 93 percent of the search revenue generated on sites owned and operated by Yahoo, instead of 88 percent. But Yahoo can also decide to remain the exclusive premium ad sales provider, in which case it will settle for an 83 percent share of the revenue. If Microsoft doesn't end the exclusive arrangement, Yahoo's share of the revenue will go up to 90 percent."
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Yahoo Filing Reveals Details of Microsoft Deal

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  • but if they mess up with my email, I'll cut the pay subscription right now.
  • by Kratisto (1080113) on Wednesday August 05, 2009 @08:57AM (#28955713)
    This deal assumes that people will use anything other than Google. There is no difference between zero dollars times 93 percent and zero dollars times 83 percent.
    • Re: (Score:3, Insightful)

      This deal assumes that people will use anything other than Google. There is no difference between zero dollars times 93 percent and zero dollars times 83 percent.

      Together they will have 30% of the market share. How is that zero dollars?

    • "This new Google thing assumes that people will use anything other than AltaVista/Webcrawler/Yahoo."

      Not saying that Bing/Yahoo will take over, but Google hasn't always been #1.
      • by dotwhynot (938895)

        "This new Google thing assumes that people will use anything other than AltaVista/Webcrawler/Yahoo." Not saying that Bing/Yahoo will take over, but Google hasn't always been #1.

        I remember when AltaVista for quite a while _was_ Internet search, the same way Google is today, and seemed just as impossible to dethrone. AltaVista gave Google an opening by straying from their core dedicated web search strategy, going for a broader portal and services oriented strategy. Sounds familiar? ;)

    • by Guse (1283076) on Wednesday August 05, 2009 @09:05AM (#28955839)
      That's a cute statement, but while Google's market share is dominant (like 67% maybe), I want to say that Yahoo has about 12% of the market... which is a pretty darn significant amount. Combined with Microsoft's share (which around 9%), you're looking at over 20% of all online ads. No, Google isn't worried, but I think that it's actually a pretty good deal for both sides.
    • Re: (Score:3, Insightful)

      by Shakrai (717556)

      There is no difference between zero dollars times 93 percent and zero dollars times 83 percent.

      There is if you operate your business under the same accounting principles used by the Federal Government ;)

    • Re: (Score:1, Flamebait)

      by sopssa (1498795) *

      These kind of comments are just total bullshit. If you check statistics, google has around 70% marketshare. Bing+Yahoo together has around 25%. If you think a little that is millions, even billions of dollars with the amount of visitors they get and what the ad clicks make them. Instead of just trolling, maybe get your facts straight before posting.

    • by sharkey (16670) on Wednesday August 05, 2009 @09:25AM (#28956135)
      There are a couple folks here that use Yahoo every day: They have it set as their homepage, and the first thing they do every morning is search for 'Google' so that they can get to web sites.

      Sad, but true.
      • Re: (Score:3, Interesting)

        by obarthelemy (160321)

        My home page and main mail adresse are still with Yahoo. Mainly for historical reason: Yahoo had that stuff when Google didn't even exist, and that's when I got them. But still, as far as homepages are concerned, Yahoo is on a par with Google. Basically, I have 3 columns of RSS feeds, + mail preview. I've tried duplicating that in Google, it does... the same thing, the same way, and I'm too lazy to switch.

        I do use Google for my searches, except it's just a matter of typing "g WoW patch 3.2 notes" in the adr

        • by ibookdb (1199357)
          You don't need the g anymore
    • This deal assumes that people will use anything other than Google. There is no difference between zero dollars times 93 percent and zero dollars times 83 percent.

      That's a pretty good assumption actually, or more accurately that's a statement of fact rather than an assumption. While Google does get a majority of search traffic, it by no means gets all.

    • by jbacon (1327727)

      OP was being facetious, guys! Just thought I'd let you know...

  • by Shakrai (717556) on Wednesday August 05, 2009 @09:03AM (#28955815) Journal

    I still think I'd be pretty peeved if I owned Yahoo stock over the fact that they rejected Microsoft's buy-out offers. The last one that Microsoft made had Yahoo valued at $31/share. It's now trading at around $14.50. Given the fact that Google dominates the search engine market and Yahoo hasn't innovated anything in years does anybody really think it's likely that Yahoo will ever see a $31 share price again? They've entered an inexorable decline that will eventually end in them being bought out by someone (probably Microsoft) for a heck of a lot less than $31/share.

    I'm kind of surprised that the board didn't sued for breaching their fiduciary responsibility when they rejected that offer. That was one heck of a deal for the shareholders and I'm extremely baffled that it was rejected.

    • by Seth Kriticos (1227934) on Wednesday August 05, 2009 @09:40AM (#28956341)

      Yahoo! shares were between $30-$40 for the last few years before the collapse. Thing is, Yahoo! did not innovate and keep market-share according to this, but they had a slow decline as people turned to Google and others more and more because of better services.

      This effectively means that they had an over inflated stock value at the time (also called a bubble). When talks with Microsoft began, a lot of actual value assessments were made, but because of the merge possibility the prices stayed hyped. Then they suddenly went down to reasonable values after the merge talks were canceled.

      This is a normal market healing mechanism. People who are into stocks should know this, make some sane assessments on the base of performance, evaluate risks and then make sane purchase decisions.

      In reality, everyone in that crowd just wants to make a quick buck without any economic reason what so ever. This is why I have zero pity for Yahoo! stock holders.

      • by Shakrai (717556)

        All of what you just said sounds like another good reason why Yahoo should have accepted Microsoft's inflated offer and run with the cash while they had a chance......

    • Re: (Score:3, Insightful)

      by Sockatume (732728)

      This is why having shareholders can suck for a business's bosses. If you want to do what's best for them, then the stock price pretty much steers your business decisions, regardless of what you might want for your business to do. I imagine that's why MS made the huge offer in the first place - even if the terms are sucky, your shareholders are going to want you to accept if it doubles their investment.

      • by Shakrai (717556)

        This is why having shareholders can suck for a business's bosses.

        I hate to break it to you but the CEO isn't the "boss" unless he owns 50.1% of the outstanding shares.

        your shareholders are going to want you to accept if it doubles their investment.

        Well duh! And this is a problem, because???? Are you telling me that if you owned a business and someone came along and offered you twice what it was worth you wouldn't accept their offer? Remember to take into consideration the fact that your business is facing both a much more nimble and innovative competitor (Google) and a 500 pound gorilla (Microsoft). Remember to account for the fact that your bus

        • by Sockatume (732728)

          You don't have to have 50.1% of the outstanding shares to make significant decisions regarding the company's future. That just gives you the potential to act unilaterally, which no sane individual is going to do anyway.

          Your second remark is exactly my point. When you have hungry stakeholders looking for a good ROI there's no concept of turning down a lucrative offer to keep your business identity, or to ensure your tightly-knit board calls the shots, or to preserve Casual Thursdays, or because the offer man

          • by Shakrai (717556)

            Your second remark is exactly my point. When you have hungry stakeholders looking for a good ROI there's no concept of turning down a lucrative offer to keep your business identity, or to ensure your tightly-knit board calls the shots, or to preserve Casual Thursdays, or because the offer mandates replacing 90% of your staff with cheap overseas labour. You've got to go where the money is.

            That's exactly how it's supposed to work. Most investors did not put their money into Yahoo with such lofty ambitions as you describe. Tell me, when you put money into your 401(k) are you doing it so Yahoo can retain it's "business identity" or are you doing it so you can retire one day? Yahoo's "business identity" is toast anyway -- they don't have the cash to compete with Microsoft or the innovation to beat Google.

        • Sure if your mentality is that you can only be number one once and will be destined for failure after you rein is over.

          Peope used think that about games consoles but nintendo bucked the trend when against two big opponents. There is no reason Yahoo can't do the same if they take research seriously.
      • by jeffshoaf (611794) *

        If you want to do what's best for them, then the stock price pretty much steers your business decisions, regardless of what you might want for your business to do.

        You're ignoring dividends - that's a way to get a return on your stock investment without constantly "flipping" your stocks. Unfortunately, it seems that most shareholders these days are more interested in short-term results and flipping their stocks, leading too many companies to make decisions based on short-term results and ignoring the issues those decisions create with long-term company stability and results.

    • by ragnathor (955771)

      It's true that Microsoft offered $31/share and Yahoo is now ~$14. However, keep in mind a lot of Yahoo's decline has to do with the economy and market as a whole. The S&P 500 is down 30% since the time of Microsoft's offer. Assuming they took the offer and invested elsewhere, Yahoo investors would have had around $20/share right now. That's still a lot better than $14, but certainly not as good as $31.

  • by Anonymous Coward

    It is staggering to look at the money and effort Microsoft has put into attacking Google - and what a complete and utter failure it has been.

    150 million in advertising, paid for media stories, and astroturfing "I'm a long time Google user and by golly I'm switching to Bing!" posts on web discussion boards. Plus silly marketshare inflating games like using Bing search links pretending to be news items on MSN pages.

    All that and all Microsoft managed to do was get their search engine slightly higher than Yahoo

    • by thejynxed (831517)

      That is because they made the mistake of re-branding their search engine right as they were bringing all of the Live! services together. They should have left it as Live Search and retained what brand recognition they had.

      This is what happens when idiot marketing drones get final say over anything regarding your product.

      Think about this for a few minutes: Xbox Live!, and the rest all have Live in the title, and is quickly and easily recognizable because of this. What PHB moron changes their branded search

  • by Locutus (9039) on Wednesday August 05, 2009 @09:04AM (#28955831)
    I was wondering if Microsoft was going to just get all of Yahoo's search data and it was stated that Microsoft gets Yahoo's search technology along with 400 of their engineers. So just how useful is the opt-out feature when you've handed your competition all your data, technology, and engineers and you've not kept the technology up for 5 years? Answer: their opt-out clause is only good for fooling the investors and board into thinking there's a way out.

    LoB
    • I was wondering if Microsoft was going to just get all of Yahoo's search data and it was stated that Microsoft gets Yahoo's search technology along with 400 of their engineers. So just how useful is the opt-out feature when you've handed your competition all your data, technology, and engineers and you've not kept the technology up for 5 years? Answer: their opt-out clause is only good for fooling the investors and board into thinking there's a way out.

      LoB

      But what options does Yahoo have at this point? Their search market share is in a free fall, falling from 20% to 10% in just one year, they have had heavy downsizing. This last ditch deal is better than dying out without even a whimper.

      • by Locutus (9039)
        everything I saw showed Yahoo with 20% share and Microsoft with 9% share. Yes, the 3rd place company was getting the 2nd place company's search technology and database data and all for the price of taking on all data center and engineering efforts.

        Yahoo's option was to continue with their 20% and use those profits to figure out how to make money off something else. They should have collected a half a billion at the very least for all of Yahoo's data. IMO, this was more of a plan by Icahn to increase his val
  • by Rosco P. Coltrane (209368) on Wednesday August 05, 2009 @09:05AM (#28955845)

    "Microsoft will pay Yahoo $50 million a year for three years and will hire at least 400 Yahoo employees as part of the companies' recent search agreement, according to a filing with the US Securities and Exchange Commission.

    50 mil and those 400 employees' salaries are pocket money for Microsoft. They have paid a great many times more than that in various out-of-court settlements over the years.

    Incidentally, another comment that springs to mind is that Yahoo must be quite desperate: $50M is nothing for a large intarweb company these days.

    Microsoft and Yahoo joining efforts will probably produce nothing good at all though: they both have mediocre search businesses, and they'll end up with a mediocre shared search business. Nothing for the big G to worry about I reckon.

    • Incidentally, another comment that springs to mind is that Yahoo must be quite desperate: $50M is nothing for a large intarweb company these days.

      50 million is peanuts; the deal is for Yahoo to provide all of the ads for Yahoo! and Bing searches and keep 88% of the revenue. Given that Bing has around 8% of the market and Yahoo! has around 12%, they're getting 88% of 20% of the market instead of 100% of 12% of the market, which works out to almost a 50% increase in potential revenue from ads. More, if you factor in the fact that Yahoo! becomes more attractive to people wanting to buy ads by suddenly increasing the size of the target audience.

      Yaho

  • It seems like it's heavily tilted in Yahoo's favor. MS seems to be grasping at straws to become relevant in search, and I don't think this did anything but enrich Yahoo. Google might keep a wary eye on them, but I doubt they are worried at all.
    • by symbolset (646467) on Wednesday August 05, 2009 @11:01AM (#28957801) Homepage Journal

      You WILL pay his fee.

      Microsoft always makes deals that LOOK like great deals for their partners. And then there's always a term in the details for some unlikely contingency that miraculously comes true that allows them to eat their partner. It would be interesting if it weren't the same show over and over.

    • Re: (Score:3, Insightful)

      If you knew anything about the business, you wouldn't say that.

      Microsoft's search strategy is long-term. Giving up a sizable profit for now (I strongly doubt that they're losing money on it, but the numbers tell you their overhead pretty clearly) gives them:

      -Yahoo's search engineers, who will move to Microsoft
      -A company with experience in ad sales and portal development
      -Over twice the market share

      This is a long-term run at Google, not something to keep Slashbots entertained for the next week or so.

      • Re: (Score:3, Insightful)

        Oh, and keep in mind that this lets them tie in and monetize Flickr (huge), Del.icio.us (also huge), and Yahoo's other services.

  • You know the old acronym, BING: But... It's Not Google!

    Quoting: "Microsoft will pay Yahoo $50 million a year for three years..."

    How does that fit? Yahoo rejected an offer of $44.6 Billion [techcrunch.com], but accepts "$50 million a year"?

    I'm guessing that if they had just Googled it, they would have found information that indicates the idea is foolish. I'm not saying I know how the idea is foolish, I'm only saying that it seems to me that something is wrong somewhere.
    • Re: (Score:2, Interesting)

      by Dudibob (1556875)
      Remember that's $50 million a year, plus 9£% of all revenue from their own sites for JUST search, plus they free up 400 peoples wages. Also Yahoo have still got Flickr, Delicious, Yahoo Mail and others to rely on. There's also a number of get-out clauses too so Yahoo can just walk away, Microsoft have come out on top of this deal but Yahoo it's not all bad for Yahoo
    • by bs7rphb (924322)

      It's a recursive acronym:

      BING Is Not Google.

  • i have just abandoned my yahoo email account and will let spammers fill the inbox & spambox until yahoo either deletes the account or needs the disk space and clears out the spam themselves because i no longer give a damn about yahoo anymore...
  • BOSS? (Score:3, Interesting)

    by Alethes (533985) on Wednesday August 05, 2009 @09:15AM (#28956003)

    How does this affect Yahoo's Search API, BOSS [yahoo.com]?

    • by gbjbaanb (229885)

      From TFS:

      The deal, announced last week, will mean that Microsoft's Bing search engine will power Yahoo's search site and Yahoo will sell premium search ad services for both companies

      I think that answers it nicely. You'll be wanting this [microsoft.com] instead.

    • by Yvanhoe (564877)
      More importantly, is Yahoo considered evil now ?
  • Doesn't Yahoo employ several key members of the FreeBSD project to work on it as much of their infrastructure (at least at one time) was powered by FreeBSD?

  • by HangingChad (677530) on Wednesday August 05, 2009 @11:39AM (#28958435) Homepage

    Microsoft will pay Yahoo $50 million a year for three years...

    That's about what Marisa Mayer spends on dry cleaning. Okay, not really, but that's a rounding error for Google.

    Microsoft and Yahoo teaming up on search reminds me of a fraternity rush when the dorks end up clinging together for survival in the corner. I just can't see anything compelling coming out of this union. Microsoft's online services are clumsy and unattractive, they're always trying to tie it to their desktop OS. And Yahoo...meh. What services do they have that Google doesn't do better? Google has Voice and Labs, are always coming out with something new, pushing into new product areas. Yahoo barely keeps up with what they have.

    This is the strategic partnership to nowhere.

    • Flickr comes to mind. Personally I like it more than Picasa.

      Delicious used to be good, but I've never used Google Bookmarks. I use Xmarks.

  • As Microsoft's search engine share sunk to its lowest level yet, with approximately 8 to 9 queries total worldwide [today.com], Steve Ballmer has hooked up with Yahoo! and its 21 queries worldwide.

    The press conference was held on a street corner in San Francisco as Mr Ballmer and Jerry Yang sat with their hats on the sidewalk and playing harmonicas with a "WILL WEBSEARCH FOR FOOD" sign behind them.

    "Understandably, we expect less activity in the Great Recession," said Mr Ballmer. "Nobody knows what value assets should be ⦠say, you aren't finished with that cigarette, are you?"

    Press attendees included a schizophrenic local resident in a tinfoil hat ("to keep Google out"), two teenagers drunk on malt liquor and a policeman keeping an eye on things from a distance. The teenagers taunted, confused and upset Mr Ballmer by suggesting he attempt to locate his own posterior.

    "My new search technology is unstoppable! Just look at this netbook!" shouted Mr Ballmer, waving an Etch-a-Sketch in a threatening manner. "IT'S MAUVE! IT RUNS WINDOWS SEVEN! LINUX PUT A RADIO IN MY HEAD! I'LL SHOW 'EM ALL! BASTARDS!"

    "Some love stories are eternal," said Mr Yang. "Romeo and Juliet. Heloise and Abelard. Leopold and Loeb. Microsoft and Yahoo."

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