Yahoo and Microsoft: Will search marriage last?

Good deal, right? Microsoft will continue to guarantee Yahoo U.S. search revenue for another year,  the Sunnyvale company said in a filing Tuesday. But the news was followed by reports that Yahoo CEO Marissa Mayer is trying to undo the 10-year search partnership her company signed with Microsoft before she took the helm.

Yahoo and Microsoft are like that seemingly happy couple at the dinner party — all smiles and compliments. “We’re happy with the relationship,” Mayer said Tuesday at a conference, according to Bloomberg. The marriage of convenience does come with benefits, with Yahoo CFO Ken Goldman reportedly telling analysts recently that the guaranteed revenue was helping cover what would have been a drop of $50 million to $60 million in the company’s sales for the rest of the year.

But Yahoo’s revenue per search has fallen since it signed a deal in 2010 for Microsoft’s Bing search engine to power its search results, according to the Wall Street Journal. The WSJ’s unnamed sources say that while Yahoo wants to end the partnership, Microsoft doesn’t. Bloomberg reported the same thing, citing its own anonymous sources. It also indicated that Google is already waiting in the wings — there supposedly is a verbal agreement — if and when Microsoft lets go.

Yahoo and Microsoft apparently have a divorce clause that states either party can opt out in 2015, according to the WSJ report. So could Microsoft nemesis Google move right in if Microsoft moves out? Remember, when Google and Yahoo talked about an ad partnership a few years ago, the Justice Department threatened an antitrust lawsuit.

As for what else Yahoo is working on amid a resurgence on Wall Street — its shares reached a five-year high Tuesday, reported Mr. Biz Break, and its shares are up about 1.4 percent as of this post — it might be going video shopping. AllThingsD reports that Mayer has been talking with Hulu.

 

Photo of Yahoo CEO Marissa Mayer from Associated Press/NBC

Levi Sumagaysay Levi Sumagaysay (4063 Posts)

Levi Sumagaysay is editor of the combined SiliconBeat and Good Morning Silicon Valley. She also helps take care of SiliconValley.com, the Mercury News tech website. Email: lsumagaysay (at) bayareanewsgroup (dot-com).