July 29, 2009

Microsoft, Yahoo! reach advertising deal

Microsoft Corp. and Yahoo! Inc. said Wednesday they had reached an advertising partnership deal that puts closure on chances of a Microsoft takeover.

Microsoft bid $4.75 billion for Yahoo! last year, but a merger failed to materialize with Yahoo! saying the offer undervalued the company. Since then, Google has increased its lead in the $12 billion a year Internet advertising business, The New York Times reported Wednesday.

In the 10-year deal announced Wednesday, Microsoft agreed to provide the search engine Bing, while Yahoo! will manage advertising sales.

The agreement will provide Microsoft's search engine, Bing, the scale necessary to more effectively compete, attracting more users and advertisers, Chief Executive Officer Steve Ballmer said in a statement.

Still, Internet dominance is a long way off. Google currently receives 65 percent of the U.S. search engine activity, while Yahoo! controls 19.6 percent and Microsoft 8.4 percent, comScore reported.