Yahoo reportedly looking to dump Microsoft search pact

Marissa Mayer has been looking for an escape hatch since taking over Yahoo last summer, The Wall Street Journal reports.

Marissa Mayer has previously noted her disappointment in Yahoo's Web search partnership with Microsoft and now reportedly wants to get out of the deal altogether.

The Web giant's chief executive has been trying to find a way to escape the foundering arrangement but has so far been unsuccessful, a person familiar with the situation told The Wall Street Journal. Mayer has been looking to cancel the deal since leaving Google to take over Yahoo last summer, the Journal reported.

The two companies entered into a 10-year search partnership in 2010 in which Microsoft would power Yahoo search and Yahoo would become the sales force for Microsoft's premium properties. However, the relationship hasn't yielded the revenue-per-search guaranteed by the partnership, prompting Microsoft to extend the RPS guarantee for another year, Yahoo disclosed in a regulatory filing Tuesday.

It's the second such extension since the deal went into effect. When Microsoft failed to hit RPS targets in the pact's first year, the guarantee was extended until March 2013. The continuing shortfall led Microsoft to extend the deal for another year.

Mayer has publicly expressed her dissatisfaction with the partnership , saying that the arrangement hasn't delivered the increased revenue or market share that was expected.

"One of the points of the alliance is that we collectively want to grow share rather than just trading share with each other," Mayer told attendees at the 2013 Goldman Sachs Technology and Internet Conference in February. "I'm not confused. Our biggest business problem right now is impressions."

Yahoo declined to comment on the Journal report, saying only that "Microsoft continues to be an important partner of Yahoo."

Microsoft also declined to address the report, saying that it was working with Yahoo to improve the partnership.

"We continue to see strong progress on the RPS front and are working closely with Yahoo to further strengthen our partnership and deliver real choice and value to advertisers and consumers," a Microsoft spokesperson said in a statement to CNET.

Meanwhile, Google, which was forced by antitrust concerns to scuttle its own ad-search deal with Yahoo in 2008, might still be waiting in the wings. Google Executive Chairman Eric Schmidt allegedly said last September that Google was interested in replacing Bing as Yahoo's search engine.

Updated a 7 p.m. with Microsoft comment.

 

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