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Yahoo Can Scrap Microsoft Deal if Microsoft Doesn’t Narrow Google’s Lead

A few more details of the hard-won Microsoft-Yahoo deal came out

A few more details of the hard-won Microsoft-Yahoo deal came out Tuesday when Yahoo filed an 8-K with the SEC:

  • The pair has until October 27 to negotiate definitive agreements. If they can't it goes to arbitration.
  • Microsoft will pick up the check for getting the deal over the regulatory hurdles including "offering, negotiating or committing to any restrictions...and contesting and defending any threatened or pending litigation, investigation or proceeding."
  • The deal could come to naught if antitrust approvals fail to come through by July 29, 2010, though Yahoo could extend the deadline six months.

  • Microsoft is going to pay Yahoo $50 million a year for three years to ease its transition and implementation costs.
  • Microsoft can terminate Yahoo's sales exclusivity on big ad accounts after five years. If it does, Yahoo's take is upped from 88% to 93% for the next five years. If Yahoo insists on exclusivity, its share goes to 83%. If Microsoft leaves the terms in place, Yahoo gets 90%.
  • Yahoo can terminate the deal after five years if the trailing 12-month average of U.S. revenue per search is less than some undisclosed percentage of Google's estimated revenue per search or if their combined query share falls below some point. A PowerPoint slide that slipped out at Microsoft's analyst meeting last week showed that Microsoft thinks Google gets seven cents in ad revenue for every search, Yahoo 4.3 cents and Microsoft 3.9 cents.
  • Yahoo can add Microsoft's mapping service and mobile search services to the search deal.
  • The pair is looking to transition and implement in 24 months from kickoff, 27 months at the outside.
  • Microsoft is going to hire at least 400 Yahoo engineers and another 150 Yahoo people to assist with the transition. The companies are supposed to work out a retention scheme.
  • Yahoo gets all the data Microsoft collects on Yahoo sites.
  • They anticipate cutting cross-patent licenses.
  • There are no termination fees.
  • Yahoo has dibs if Microsoft sells its paid or algorithmic search business.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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