Microsoft Hiring About 400 Employees From Yahoo! As Part Of Search Deal

Posted Aug 5, 2009

Some of the additional T’s and C’s of the Microsoft and Yahoo! search deal are being revealed.  For example, Yahoo! has the rights to cancel the search deal if Google’s revenue per search query rate ends up being higher than the combined Microsoft and Yahoo! RPS rate.

In addition to becoming exclusive search engine for Yahoo!’s properties, Microsoft will also be hiring 400 employees from Yahoo!  Microsoft may could end up providing Yahoo! 90-93% of search ad revenues during the second leg of the agreement.

These details were revealed in a filing with the SEC yesterday.  Yahoo! may also cancel the deal if Microsoft decides to exit from the algorithmic search or paid search ad business.  In the second half of the deal term, Microsoft has the rights to terminate its partnership with Yahoo! sales exclusivety for other premium search advertisers.  If Microsoft does this, then the revenue rate will increase to 93%.

Microsoft will pay Yahoo! $150 million over the next 3 years to cover transition and implementation costs.

Other terms in the 8-K:
– Subject to certain specified restrictions, Yahoo! will have full flexibility with respect to the user experience, content and look and feel on all of its web pages, and will also be entitled to use the paid search services and algorithmic search services for non-internet search queries with minimal restriction.
– Yahoo! may implement each of the mapping services and the mobile search services on a non-exclusive or an exclusive basis. Yahoo! also has the option to work with Microsoft to implement the services on other platforms. If Yahoo! elects to receive services for other platforms, it must receive such services on an exclusive basis.
– Yahoo! may, at its option, elect to have Microsoft deliver the algorithmic search services and paid search services through a search results page hosted by Microsoft (the ?White Label Solution?) on a country by country basis (if the United States is also a White Label Solution country), instead of through the Microsoft API. The White Label Solution will be in all material respects the same as Microsoft?s search results pages. Yahoo! may substitute Yahoo! applications or services for Microsoft applications or services within the White Label Solution.

The deal isn’t expected to clear until early 2010 due to regulatory approval.  And both companies have up until October 27 to make further definitive agreements.