Yahoo, Microsoft make search pact official (FAQ)

With the blessing of U.S. and European regulators, Yahoo and Microsoft are free to implement their search partnership. What's in store for users and advertisers?

Tom Krazit Former Staff writer, CNET News
Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.
Tom Krazit
4 min read
Yahoo is ready to turn over the indexing and ranking of search results (on the left) to Microsoft, emphasizing its work on presenting those results (on the right). Yahoo

It took eight months, but the search strategy that Microsoft and Yahoo settled on after years of flirting is about to get started.

The U.S. Department of Justice and European Uniongave their blessing to the deal early on Thursday, paving the way for Microsoft to take over the business of providing search results to Yahoo while Yahoo will get to sell search ads on both Yahoo and Bing. Yahoo is busy reminding anyone who will listen that it will still control the way search results are presented on its pages, while Microsoft thinks it can improve its search algorithms with access to Yahoo's massive audience.

It will take some time for the companies to implement the complicated deal. In the meantime, here's a list of questions and answers that are sure to arise now that the deed is done.

How did we get here?
Slowly. Microsoft and Yahoo have been talking about various combinations of acquisitions, partnerships, and alliances since 2008, before finally settling on the current deal after their disastrous acquisition talks led to Yahoo's hiring of CEO Carol Bartz. The deal was held up pending regulatory review, since just about any time that two companies in a three-company market propose joining forces, regulators will want to examine the potential aftermath.

What will change on Yahoo's site?
The changes could be very difficult to notice. Microsoft is now providing the back-end technology that generates search results and search ads based on query keywords. But Yahoo will control how those results are presented, meaning it can add all sorts of structured content like statistics for baseball players or movie times at local theaters to search queries.

There will likely be some differences over time between how Yahoo's algorithms determined the most relevant result, and how Microsoft's technology goes about that process. But for the most part, the business of indexing and ranking results is somewhat transparent to average searchers. Companies and Web publishers, on the other hand, will be watching closely.

What will happen to Yahoo technologies like BOSS and Search Monkey?
Microsoft has the right to use those technologies in their search arsenal, but they are being very coy about their plans at the moment. Microsoft now has a 10-year license to "certain Yahoo search technologies," according to a Web site set up to explain the deal. That means they can essentially cherry-pick the things they like, and ignore the things they don't.

The combined entities still seem interested in BOSS (Build your Own Search Service) but haven't decided whether that will be a Yahoo project, a combined project, or morph into something else completely different, according to Yahoo's Developer Network blog. Search Monkey--a project to advance semantic search concepts--seems a little more up in the air: "The landscape is complex, so we're working hard to determine which path provides the best value for site owners and end users," the companies said Thursday.

What will change for Microsoft?
Microsoft will have to give up control of its major search advertisers to Yahoo's sales force in exchange for increasing its market share. Microsoft will also get to pick and choose from among Yahoo's assortment of back-end search technology developed over the years, and a certain number of Yahoo employees will now work for Microsoft.

The company has argued that its ranking technology will improve once it has access to Yahoo's users, which Google is skeptical about but Microsoft will have a chance to prove on its own. Either way, the deal is still a vote of confidence in Microsoft's Bing technology.

Does Google care?
It seems nonplussed by the deal, but that's mainly for show: Google will definitely watch the implementation stage to see how the combined partnership affects the search experience and advertiser interest.

Other than Yahoo and Microsoft, advertisers are probably the most excited about the deal. Buying a search ad from the combined partnership now gets you exposure before nearly twice as many users, and while no one will be able to afford taking money out of Google, they'll have a more effective outlet for the remainder of their marketing budget. As of January, Google had 65.4 percent of the U.S. search market, Yahoo had 17 percent, and Microsoft had 11.3 percent, according to ComScore.

When will I notice a difference?
It may take awhile, if at all. Microsoft and Yahoo want to get the back-end search experience migrated to Microsoft by the end of this year. Advertisers might start to make the switch by the end of this year, but the companies said they might delay that switch if it's too difficult to pull that off around the busy holiday shopping season.

But in all honesty, this deal is much more about Yahoo's cost structure, Microsoft's search ambitions, and advertising budgets than the user experience. Microsoft and Yahoo will still continue to provide unique user search experiences on their respective sites; the only difference is that the list of results for queries on Yahoo and Bing will be identical.