As I am sure readers of this blog will be aware, Yahoo has agreed a deal with Microsoft to have their search results supplied by their newly updated Bing search engine, although as my colleague Joe reported last Wednesday, we may well have to wait and see whether or not US Antitrust regulators will approve the deal.
This morning I’ve been reading on the BBC about how Yahoo have escape clauses on this deal with Microsoft to ensure that certain targets are achieved.
I think that this is a sensible move from Yahoo, as it covers themselves against circumstances that could see them end up losing money as a result of the deal – obviously the aim is to cut costs as well as increase revenue for Yahoo at the moment, and if Microsoft are unable to do this, it’s only right that Yahoo retain the right to walk away.
So, if Yahoo does not generate a certain percentage of advertising revenue in relation to Google’s income, they can walk away from the deal. What has not been made public knowledge is what percentage in relations to Google this is, and this is sure to be a closely guarded secret!
Yahoo can also escape the deal if the share of the search market falls below a specified percentage.
In the BBC report, there have also been some other details released – such as Microsoft will be paying $50m a year for the first 3 years of this deal to smooth the transition process, that Yahoo will keep 88% of the generated revenue from adverts and that Microsoft will take on some of Yahoo’s staff.
It will be interesting to see if these 2 combined search entities can manage to put pressure on Google’s market share, and we will be keeping a close eye on our clients logs to monitor this!
Pete Handley
Campaign Delivery Manager
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