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Microsoft, Yahoo to Integrate Search Businesses After Approvals

Microsoft, Yahoo to Integrate Search Businesses After Approvals

(Bloomberg) — Microsoft Corp. and Yahoo! Inc. said they will start integrating their Internet-search businesses after winning regulatory approvals in Europe and the U.S. for their efforts to challenge Google Inc.

The companies will start implementing the combination “in the coming days,” according to a joint statement today. The agreement won’t harm competition in the 27-nation European Union, the European Commission said earlier today. The U.S. Department of Justice also approved the deal.

Microsoft and Yahoo struck the 10-year agreement to challenge Google, which controls about two-thirds of the U.S. search market. Yahoo, which has lost market share, plans to use Microsoft’s Bing search engine on its sites and sell ads next to the search results.

“Now they can push forward,” said Colin Gillis, an analyst at BGC Financial LP in New York, who recommends buying Yahoo shares and doesn’t own any. “It wasn’t a given that you were going to get EC and U.S. approval. The investor concern was that if this process got politicized, both companies are stuck in limbo.”

The companies said they plan to complete the integration by the end of the year, at least in the U.S. They plan to move U.S. advertisers and publishers across to the new arrangement before the 2010 holiday season, though they may wait until 2011. All global customers and partners will be transitioned by early 2012, the companies said.

Microsoft rose 8 cents to $28.67 at 11:39 a.m. New York time on the Nasdaq Stock Market. The shares had lost 6.2 percent this year before today. Yahoo, based in Sunnyvale, California, gained 3 cents to $15.47.

‘Stronger Competitor’

While Mountain View, California-based Google is maintaining its dominance in the search industry, Bing has increased its market share for eight straight months. Redmond, Washington- based Microsoft plans to claim more of the market when it completes the agreement with Yahoo.

Groups such as advertisers and online publishers expect the deal to “increase competition in internet search and search advertising by allowing Microsoft to become a stronger competitor to Google,” the European commission said in a statement.

Yahoo Chief Executive Officer Carol Bartz struck the Web- search and advertising deal with Microsoft in July, letting it cut capital spending by a projected $200 million.

Microsoft’s share of the U.S. Web-search market rose to 11.3 percent in January from 10.7 percent the previous month, Reston, Virginia-based research firm ComScore Inc. said. Google’s share fell to 65.4 percent from 65.7 percent, while Yahoo dropped to 17 percent from 17.3 percent, ComScore said.

–Editors: Ville Heiskanen, Julie Alnwick



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