This past May, Yahoo! CEO Carol Bartz said that the search engine company is open to a deal with Microsoft as long as it involves “boatloads of money.” This is probably what Microsoft decided to pay because the media is going wild about a deal that the companies are planning to announce later today. Through the agreement, Microsoft search engine Bing will become the default search engine on the Yahoo! homepage.
Yahoo! currently has about 30% marketshare for search while Google has about 65%. However Yahoo! is the #2 most visited website in the world because of all the services they offer which include Fantasy Sports, News, Video, Music, etc. The deal will give Yahoo! the chance to get out of the search-advertising technology platform business and focus more on its media properties. Microsoft will manage the inventory of advertising through their AdCenter platform.
It seems like many advertising companies support a Microsoft-Yahoo! partnership because they believe that they are a less monopolistic search-advertising business combined than a combined Google-Yahoo! partnership. The deal would still have to clear the Department of Justice. Microsoft was highly critical of the Google-Yahoo! partnership to the government when Yahoo! rejected an acquisition bid from the software giant.
More news on this story as it develops.