UPDATE 1-Yahoo sought to "pause" search rollout with Microsoft

SAN FRANCISCO Mon Oct 21, 2013 6:43pm EDT

SAN FRANCISCO Oct 21 (Reuters) - A U.S. judge on Monday refused to let Yahoo Inc YHOO.O delay using Microsoft Corp's Bing search capabilities in Taiwan and Hong Kong, affirming an arbitrator's decision in favor of Microsoft.

Yahoo Inc Chief Executive Marissa Mayer sought to slow the rollout of its search partnership arguing that Microsoft CEO Steve Ballmer's decision to retire had raised concerns, according to court documents.

But U.S. District Judge Robert Patterson Jr upheld an arbitrator's earlier ruling in favor of Microsoft.

Yahoo and Microsoft began a 10-year search partnership in 2010, before Mayer took over as Yahoo's CEO. The two companies hoped their combined efforts could mount a more competitive challenge to Google Inc, the world's No.1 search engine.

The partnership has not lived up to expectations. Google remains the dominant search engine, with roughly two thirds of the U.S. search market, while Microsoft and Yahoo's combined share of the market is essentially unchanged.

Yahoo said it wanted to pause the process until Mayer had a chance to discuss the partnership with Ballmer's successor, according to a court filing. Microsoft said in August that Ballmer would retire within 12 months.

Mayer has criticized the partnership in the past. "We need to see monetization working better because we know that it can and we've seen other competitors in the space illustrate how well it can work," Mayer said at an investor conference in February.

Microsoft and Yahoo were not immediately available for comment.