Yahoo (YHOO) disclosed more details regarding its search and advertising partnership with Microsoft (MSFT) today via a filing with the Securities and Exchange Commission.
The sides must negotiate and execute their agreement by October 27.
An arbitration panel will hear any disputes and will set final language.
The deal can be terminated by mutual consent or if things don’t shape up by July 29, 2010.
Yahoo can extend that date by six months if antitrust approvals don’t go through by then.
Yahoo will get an 88% share for the first five years on Yahoo properties. After five years, Microsoft has the option to kill Yahoo’s sales exclusivity for premium search advertisers. If it does, Yahoo’s revenue share rate goes up to 93% — unless Yahoo exercises its option to retain exclusivity, in which case it would go down to 83%. If Microsoft does not exercise that option, the rev share rate will be 90%.
In addition to revenue share, Microsoft will pay Yahoo $50 million annually for the first three years. Hardly “boatloads of money,” but will help with the transition.
Yahoo can kill the deal if the trailing 12-month average of the RPS (revenue per search) of their combined queries in the U.S. falls below “a specified percentage” of Google’s estimated RPS, or if the combined Yahoo-Microsoft query market share falls below a specified point. Depending on what those specified points are, that could help Yahoo if Microsoft steals too much of Yahoo’s share. Or if Google knocks them both silly.
After 5 years, Yahoo can kill the deal if the trailing 12-month average of Yahoo’s U.S. RPS is less than a specified percentage of Google’s RPS.
If Microsoft tries to sell its search business, Yahoo has the right of first refusal and right of last offer to buy it.
Microsoft will hire no less than 400 Yahoo employees and will pay them competitively. The companies will also agree on a retention plan to keep those 400 and an additional 150 Yahoo employees to help in the transition.
Options for patent licensing.
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