Reports: Microsoft-Yahoo deal to come in next 24 hours

An official announcement of a search and advertising deal between the two tech giants is expected to be made within the next 24 hours, according to All Things D.

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Jennifer Guevin
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Updated at 6:30 p.m. and 11:50 p.m. PDT with additional details.

For more than a year now, rumors of a potential deal between Microsoft and Yahoo have ebbed and flowed. And it looks like the denouement of this epic tale may finally be upon us. A search and advertising deal between the two tech giants is expected to be announced within the next 24 hours, according to All Things D's Kara Swisher, who cites multiple unnamed sources.

It wasn't clear if a final deal had been signed, Swisher said Tuesday afternoon, but negotiations have apparently wrapped up. One sticking point late in the discussions came when Microsoft bristled at Yahoo's request for an upfront payment on the order of several hundred million dollars and revenue guarantees that would have meant billions of dollars over the course of the deal, according to Ad Age. But executives apparently worked through that kink and are now putting the finishing touches on an agreement.

According to All Things D and a separate report from Ad Age, Microsoft's search technology will power the search bars on Yahoo's pages. However, Yahoo will still sell search ads on its site and on Microsoft's Bing, according to the reports, which means Yahoo will be able to maintain the relationship with large advertisers interested in both display and search ads. In addition, Yahoo will be entitled to 110 percent of revenue generated from search ad sales for the first two years of the deal, according to All Things D. In the third year, that number will drop to 90 percent.

Yahoo has not responded to requests for comment on a potential deal. Microsoft declined to comment. Stay tuned for more as this story unfolds.

Tom Krazit contributed to this report.