Update: It’s official. Release here.
Earlier: Last February, Microsoft offered to buy all of Yahoo for $40+ billion. Last summer, Microsoft offered to buy Yahoo’s search business for $1 billion.
A couple of months ago, Yahoo CEO Carol Bartz said it would take “a boatload” of money to get her to sell Yahoo’s search business. Two weeks ago, a report suggested that the finally-impending deal price tag would be “several billion.”
And now the deal is done, says Kara Swisher. And we know the actual price:
As Michael Learmonth reported two days ago, the years-in-the-making Microsoft-Yahoo search deal will just be a revenue-share.
From Yahoo’s perspective, it had better be one whopping huge revenue-share. Or Jerry Yang won’t be the only Yahoo who will have lost face and credibility over this thing.
Details to be announced within 24 hours, says Kara. We’re on the edge of our seats.
UPDATE: AdAge’s Michael Learmonth has a lot more interesting details. The more we learn, the worse it sounds.
Bing will become the default search engine on Yahoo, creating a search player with close to 30% market share of search queries, compared with Google’s 65%, according to ComScore data.
One of the most interesting wrinkles involves who takes ownership of search sales: Yahoo is likely to take on exclusive representation of Bing inventory to eliminate channel conflict and complexity for advertisers, but not before both sides unwind the thousands of advertiser relationships and proprietary systems through which many large advertisers buy search ads. Microsoft’s AdCenter is expected to be the sales-technology platform.
It’s an incredibly complex task, and individuals close to both sides say they have no reason to rush that aspect, especially because they expect some antitrust scrutiny from the Department of Justice, which could determine how that part of the deal is ultimately structured.
The deal will take Yahoo out of the search-technology business so it can focus on media, marketing services and sales. Microsoft, especially if it can cede search sales duties to Yahoo, becomes more of a technology and infrastructure company, its disciplines better aligned with its strengths. (It would still, however, have a massive global display-ad sales business.)
In return, Yahoo will retain the ability to sell search and have access to an even bigger pool of search data that it can use to target users with display ads.
Executives on both sides agree that the optimal structure for the deal would be to have one point of contact selling search inventory, but that will require restructuring vast departments with multiple heads at both Microsoft and Yahoo, which could take time.
In addition, Microsoft in particular is very concerned about the Department of Justice’s reaction to the deal and they may seek its blessing, much like Google attempted to do last year before it went forward with its proposed search deal with Yahoo. Unlike that Google-Yahoo deal, this Microsoft-Yahoo one appears to have broad support from advertisers, which have long argued that the market needs a second strong search player to foster competition.
Microsoft executives are said to be concerned that behind-the-scenes lobbying by Google will sway regulators and could delay implementation of the deal for months. The irony here is that Microsoft was the main force lobbying against Google’s attempt to do a search joint venture with Yahoo, as well as the force organising advertiser opposition to the pact.
Read Michael’s full article here >
“Complex” doesn’t even begin to describe this. Combine that with months of lobbying and anti-trust scrutiny, and you have the potential for six months of purgatory–followed by a management nightmare. Hate to say it, but this is shaping up to be a disaster. More detailed thoughts here >
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