Yahoo and Microsoft today announced a 10 year deal that is intended to make Google sweat. Through the new partnership Microsoft wants to show that its new, much-hyped search technology, Bing, is just as good or better than Google’s. The objective is to take away sales biz from Google, which earns more than $20 billion a year from ads.
The AP reports the team effort will have Microsoft focus on search technology. Yahoo’s responsibility would be Web advertising and “luring traffic” to its Web sites, which currently attract more than 570 million people worldwide each month.
It was only a little more than a year ago that Yahoo rejected a $47.5 billion offer from Microsoft to buy the company. Now, the Seattle-based company isn’t even offering advance cash in the deal. Instead, Yahoo will get 88% of search ad sales made on its Web site. But Yahoo sees an upside – $500 million in operating profits, by spending less on search technology, even though that’s not expected to happen until 2012.