The ongoing saga of whether Yahoo! would be acquired by Microsoft is said to have finally ended.
Yahoo Inc. has announced that it has entered into a search advertising partnership agreement with Google Inc. Only hours before the Yahoo-Google partnership was announced, Yahoo said that talks with Microsoft Corporation as to a full or partial acquisition had come to an end.
Here are the major highlights of the Google-Yahoo deal:
• Yahoo will run ads supplied by Google's AdSense technology alongside Yahoo's search results and on some of Yahoo's Websites in the U.S. and Canada.
• Yahoo expects the deal to generate $250 million to $450 million in incremental operating cash flow in the first 12 months, with potential annual revenue of $800 million.
• The four-year agreement can be renewed twice, with the maximum term being 10 years.
• The deal is nonexclusive and allows Yahoo to display paid search results from Panama (its own ad technology) and from other third parties.
• Yahoo will select the search terms and the Web pages that will offer Google paid search results. Yahoo will also determine the number and placement of these results, and the mix of results provided by Panama, Google or other providers.
• Advertisers will pay Google directly for each click on its paid search results. Google will share a percentage of this revenue with Yahoo.
• Yahoo and Google will enable interoperability between their instant messaging services.
• Either party can terminate the deal in the event of a change in control at their respective companies. Yahoo must pay a $250 million fee if the deal is terminated as a result of a change in control that occurs within 24 months. That fee can be reduced by 50 percent of revenues earned by Google under the agreement.
• Google and Yahoo claim they are not required to obtain regulatory approval, but agreed to delay implementation for up to 3 ½ months to allow the U.S. Department of Justice to review the arrangement.
