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The news headline "zipper" in New York's Times Square announces a Microsoft deal with Yahoo, Wednesday, July 29, 2009. Microsoft Corp. has finally roped Yahoo Inc. into an Internet search partnership, capping a convoluted pursuit that dragged on for years and finally setting the stage for them to make a joint assault against the dominance of Google Inc. (AP Photo/Richard Drew)
AP Photo/Richard Drew
Off to the regulators.

Yahoo and Google have struck a search deal—but it still needs the Department of Justice’s OK

By Alice Truong

Deputy editor

Yahoo CEO Marissa Mayer revealed today (Oct. 20) that the company has struck a deal with Google to provide search results and ads for Yahoo.

The two companies reached the three-year agreement in October in order “to bolster [Yahoo’s] search capabilities,” Mayer told investors during an earnings call. Yahoo began running limited tests serving Google search results earlier this year, but this is the first time the company has acknowledged a formal partnership.

The agreement is subject to a voluntary review by the US Department of Justice and will only take effect once cleared by the government. In 2008, a similar deal between Google and Yahoo fell apart due to opposition from antitrust regulators.

Under the terms of the deal, Google will pay Yahoo an undisclosed percentage of gross revenue for ads displayed on Yahoo properties and affiliate sites, and Yahoo will pay Google for algorithmic and image search results. Yahoo has the discretion to choose which and how many queries to send to Google. Mayer said she expects the company’s own ad platform, Gemini, to serve more of Yahoo’s mobile traffic.

This is a nonexclusive deal, made possible only after Yahoo renegotiated its formerly exclusive search partnership with Microsoft’s Bing search engine in April. Under the new terms, Bing serves the majority (51%) of Yahoo’s search results, but Yahoo is free to generate the remaining results using its own technology or with another partner.

Mayer said earlier this year that she intends to invest more in search in order to give the company greater autonomy. Yahoo, the world’s third largest search engine, has been relying on partnerships to increase its search share, including deals with Mozilla and Oracle to serve as the default search engine, respectively, on the Firefox browser and for users of Java software. But Mayer has made no secret that what she’s gunning after—and what could dramatically increase Yahoo’s share overnight—is to be the default search engine on Apple’s Safari browser.

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