On October 19, Yahoo filed regulatory paperwork with the SEC that revealed a new arrangement between the search engine and Google. The apparent goal of the agreement is to aid Yahoo’s search business, on both desktop and mobile devices. The agreement outlines the following as services that Google will provide:
- Web search results
- Search ads
- Image search services
In the new deal, there is no minimum number of search queries that Yahoo is required to give Google, meaning Yahoo has the flexibility to manage its search queries however it pleases. This is clearly stated in the agreement:
“The Services Agreement is non-exclusive and expressly permits Yahoo to use any other search advertising services, including its own service, the services of Microsoft Corporation or other third parties.”
Loosening Ties With Microsoft
This pact would not be possible were it not for Yahoo’s recent loosening of ties with Microsoft. Though Yahoo still continues to use Microsoft as a search partner, their contract was adjusted earlier this year to remove the exclusivity. Yahoo’s new deal with Google also does not require exclusivity from Yahoo, meaning Yahoo can draw search query results from the two top competitors in the market.
Google dominates the search market with nearly 64 percent of queries as of last month, while Microsoft falls short of that with only 20.7 percent of queries. Google clearly has more to offer Yahoo in terms of reach. Plus, Yahoo is likely looking for a lift in performance as quarterly earnings fell below analysts’ expectations. Nonetheless, Yahoo and Bing claim their relationship still stands and maintains the same goals as before. The following statement comes from Microsoft in response to an inquiry from GeekWire about Microsoft’s partnership with Yahoo:
“We remain committed to the Yahoo syndication partnership and will continue to serve the majority of Yahoo traffic as outlined in our contract extension. Yahoo is a valued partner and we look forward to continuing to serve our advertising customers through the Bing Ads marketplace.”
How do you feel about this recent announcement? Do you think this new agreement will bring Yahoo’s earnings in alignment with analysts’ expectations?