July 29, 2009 / 3:42 PM / 10 years ago

Deal long time coming say Microsoft, Yahoo CEOs

SEATTLE/SAN FRANCISCO (Reuters) - Microsoft Corp and Yahoo Inc’s top executives had been talking about a search advertising partnership for months but only knew they had a deal on Monday, the CEOs of both companies said on Wednesday.

The two companies finally announced a 10-year ad partnership to take on Google Inc early on Wednesday, apparently ending a saga that started with Microsoft’s failed attempt to buy Yahoo outright, launched in January of last year.

“We’d been working in earnest at what I would call a second layer of details for at least a month now, but it was Monday before we had a deal,” Microsoft Chief Executive Steve Ballmer said in a telephone interview.

Ballmer and Yahoo Chief Executive Carol Bartz met face to face “three or four times” over the last six months, said Ballmer, and helped out negotiating teams several times more on the phone.

The final deal agreement runs to over 100 pages, said Ballmer, the culmination of months of work. Wednesday was the first time either company has discussed the deal openly, after leaving investors and media guessing on the state of talks for several months.

Under the partnership, Microsoft’s Bing search engine will power search queries on Yahoo’s sites while Yahoo’s sales force will be responsible for selling premium advertising based on search terms for both companies.

Yahoo’s Bartz insisted that did not mean her company was no longer a player in web search.

“We’re not out of the search business,” said Bartz. “But yes, the technology that Yahoo has is being licensed to Microsoft so they can power the search for us.”

Bartz acknowledged there will be redundancies as Microsoft takes control of the search technology side of the business, but said layoffs were too early to quantify.

“Implementation could well be two-and-a-half years out, depending how long regulatory (approval) takes, so it’s much too early to be talking about who is redundant and who they are,” said Bartz.

“Nothing can happen between the two companies until we get through regulatory (approval), and then we have to get through the whole implementation process,” Bartz added.

Reporting by Bill Rigby, editing by Gerald E. McCormick

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