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Yahoo-Microsoft Merger Approved

The U.S. Department of Justice and the European Commission have approved plans by search providers Yahoo! and Microsoft to integrate their businesses, which would allow them to better pose a challenge to current market leader Google Inc.

The merger, first announced in mid-2009, will involve Microsoft's Bing search engine powering Yahoo!'s search results. This would leave the latter more room to develop its own content while continuing to play its role in the search engine market.

The 10-year deal could have a major impact on the marketing strategies of businesses currently advertising on Yahoo! search, as the company will now share responsibility for pay-per-click advertising sales with Microsoft.

Under the merger, Yahoo! will be responsible for advertising sales to high-volume customers, while Microsoft will deal with self-service advertisers. This could also affect the way companies employ search engine optimization (SEO) strategies.

The deal was first proposed by Microsoft in late 2006 and again in 2007, but Yahoo! refused both offers. In 2008, Microsoft made a bid to buy out the company for $47.5 billion, only to withdraw it later on.

Since Microsoft's last offer, Yahoo! has suffered falling stocks due mostly to slow search activity. With the merger, Yahoo! stands to boost its profits from the 88% revenue share it gets for the first five years, according to the deal terms.

The deal is expected to even out the search engine market currently dominated by Google. Latest research from internet marketing data provider comScore shows that Google holds two-thirds of the market, while Microsoft and Yahoo! have 3.2% and 7.4% respectively.

The finishing touches of the deal are expected to take at least a couple of years more, but both companies are expecting to launch the project by 2012.