MICROSOFT,YAHOO JOIN FORCES TO CHALLENGE GOOGLE

Washington: Tech giants Microsoft and Yahoo reached a long-awaited partnership Wednesday in a bid to challenge Google, which holds a 65 per cent market share in online search.

Under a 10-year deal, websites from both companies would use Microsoft's Bing search engine, which could now integrate Yahoo's considerable trove of search technology.

Yahoo, in turn, would handle worldwide sales of premium search-related advertising for both companies.

In exchange for becoming Yahoo's sole search provider - and gaining access to its massive traffic - Microsoft would pay its partner 88 per cent of the search revenues generated on Yahoo sites.

"This agreement comes with boatloads of value for Yahoo, our users and the industry, and I believe it establishes the foundation for a new era of Internet innovation and development," said Yahoo chief executive Carol Bartz in a statement.

According to Microsoft chief executive Steve Ballmer, the deal will allow Microsoft to "create more innovation in search, better value for advertisers and real consumer choice in a market currently dominated by a single company".

And in a dig against online search market leader Google, the companies said in a joint statement that "advertisers no longer have to rely on one company that dominates more than 70 per cent of all search".

A Yahoo-Microsoft partnership would mean about 28 per cent of Internet searches would be performed on their combined platform, according to figures from ratings firm comScore Inc.

That would still be less than half of the about 65 per cent market share of Google Inc., which has long dominated the search space.

Last year, Microsoft attempted to buy Yahoo for more than $45 billion, an unsolicited bid Yahoo rejected, but the Redmond, Washington-based software giant has long had Yahoo's search business at the top of its wish list, and the two had reportedly been in discussions for months.

Yahoo estimated the deal would add $500 million to its annual operating profit, as well as saving it around $275 million in expenses related to developing and maintaining its own search technology.