Yahoo just disclosed a deal with Google that could potentially revive its relatively weak search engine tech. The deal came into effect starting October 1 and will run all the way to 2018. The arrangement will make available to Yahoo its biggest competitor's search ads, algorithmic searches, and image search services on both desktop and mobile, according to The Verge.
Apparently, the deal is non-exclusive. This means that Yahoo can draw on Bing or any other provider. The deal is similar though far less binding than Yahoo's arrangement with Microsoft. Back in 2010, Microsoft agreed to a 10-year arrangement that involves a single digit cut of search ad revenue in exchange for Microsoft's access to Yahoo's still-considerable reach. That deal has since been loosened to allow either company to walk away with a four months' notice.
It was theorized that the combination of Yahoo and Bing would help make them more competitive to Google which enjoys a significant lead ahead of both companies. The Google deal, however, is expected to have more impact than the previous arrangement, Engadget reported. While it may seem odd at first, the Yahoo and Google partnership is a practical one.
The new Yahoo-Google alliance will help Yahoo's financial position. At the end of this year's third quarter, Yahoo earnings dropped to $76 million. When Google starts funneling cash into Yahoo for search ads, Yahoo is expected to earn a whole lot more than it used to.
Reuters also noted the success of Yahoo's emerging businesses. Revenue from these "mavens" (mobile, video, native, and social advertising) as Yahoo CEO Marissa Mayer calls them rose 43% for a total of $422 million at the close of the third quarter. The Google deal and "mavens" success seem to be the only bright points for Yahoo at this point. For this year alone, Yahoo shares lost 35%.
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