This morning Yahoo gave up the ghost on search and signed a 10 year deal adopting Microsoft’s Bing search platform as its primary search technology. In the agreement, Microsoft will be the leading search provider for all of Yahoo’s search properties (over 100 sites) while Yahoo focuses on surviving… err I meant, “allowing Yahoo to focus on what we do best, and that is to be the center of peoples’ lives online” (Yahoo CEO, Carol Bartz).

The following is Carol Bartz’s speech (note: this link and image on this page opens a windows media file) with several key sections bolded for your convenience:

Click for Windows Media Video - This picture is a screenshot of Yahoo! CEO, Carol Bartz's videoIt’s a great day at Yahoo; we are excited about our search agreement with Microsoft. We have reached an agreement that I believe will benefit our users, our advertisers, as well as Yahoo and our shareholders.

Yahoo is where millions go online every day to see what’s happening with the people and things that matter to them most. In fact, 1 out of 2 Internet users come to our more than 100 leading sites around the world every day. We know that for every one of those users, Internet search is an important part of their experience.

Yahoo will continue to feature search throughout our properties, and Microsoft will power the technology behind that search. Yahoo will be the exclusive world-wide relationship salesforce for both company’s premium search advertisers.

Why would we do this?

This deal enables us to keep a healthy revenue stream and invest in areas critical to our future, while Microsoft invests in search technology. Yahoo is excited about vesting more in our sites worldwide, our mobile experiences, and in display advertising for our advertising partners.

This agreement provides both Yahoo and Microsoft the scale necessary to compete against Google; which dominates more than 70% of all search.

The scale comes with a couple of unique benefits and advantages:

For our users: we will provide better and more relevant search results. Yahoo is commited to providing the best user experiences. Whether through our own products and technologies or working through our other innovators like Microsoft.

For advertisers the deal will offer a viable, competitive alternative in the marketplace. This gives them greater ease of use and cost savings working with a single platform and a single salesteam.

For publishers: our combined search platform will help them reach more users.

The real advantage is allowing Yahoo to focus on what we do best, and that is to be the center of peoples’ lives online. We do that with our home page, mail, finance, sports, news, entertainment, and many other products around the world. We do that with mobile experiences that are second to none. We do that with compelling advertiser products in both search and display. This deal puts our focus front and center.

I am excited about the future we are going to create.

I will try to translate:Yahoo raised the white flag, we want to give up on search so we can make money and I knew that signing a deal with the cheesy salesman, I mean Steve, would keep Yahoo!’s shareholders from lynching me… maybe. Oh and everyone… please consider making us the center of your lives online! Really, Facebook and Google don’t hold a candle to us!”

Yahoo and Bing join forcesHere is another interesting tidbit about the negotiations between Microsoft and Yahoo. As you might imagine, you can bet that Ballmer felt like a seriously fat cat when this offer was brought to the table (no matter who tabled it). Well, here is an excerpt of an interview with Carol Bartz and Steve Ballmer today that was published a couple of hours ago on the Seattle Times.

Q: What were priorities for each of you in these negotiations? What were the things your team walked in with knowing you wanted or were not going to give up on?

Bartz: He wanted to make sure he beat me up.

Ballmer: I’ll defer on that one. I’m not sure I feel like the beater, maybe the beatee.

Ballmer: It needed to be a real basis to how we operationalize the thing. This is where I say Carol pushed harder than I would have myself understood. They actually have search partnerships. They’ve done in Japan. They have substantive ones in this ilk, relationships they brought to negotiation. Getting the fundamental deal, that happened faster since then.

Bartz: Listen, these things only work if both sides feel like they’ve won. And “won” means “fair.” What I really like about watching this unfold is, sure, it doesn’t mean there weren’t spirited discussions about it, but everybody is still smiling and joking, starting with Steve and I.

If you compare those poorly worded answers to the other clean and precise answers in the interview you may notice what I did – this question brought up a little heat that still hadn’t abated. Sure, this is hardly a surprise since Yahoo was obviously the underdog in any negotiations. That said, it is pretty interesting to see what I interpret as tension in something as impersonal as a written interview; especially from such weathered professionals as Ballmer and Bartz. Ahh, if I could only have been a fly on a wall in that negotiation!

To sum things up, I think this is a great mating because it finally creates a vacuum that will, hopefully, be filled by another competitor in the days to come. In addition, and most importantly, this “partnership” has the potential of scraping away at Google’s search share – which is never a bad thing.

by Ross Dunn, CEO, StepForth Web Marketing Inc.
Increasing the bottom line online for businesses since 1997