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MICROSOFT HITS BACK AT GOOGLE

SOFTWARE giant Microsoft yesterday sealed a global search advertising deal with internet giant Yahoo, ending a 19-month courtship and launching its next assault on Google&rsquo;s market dominance.<br /><br />Under the freshly-drafted 10-year agreement, Microsoft&rsquo;s Bing search engine &ndash; launched in June &ndash; will power search queries on Yahoo&rsquo;s sites, while Yahoo will provide the search-advertising sales force for both sites.<br /><br />&ldquo;Through this agreement with Yahoo, we will create more innovation in search, better value for advertisers and real consumer choice in a market currently dominated by a single company,&rdquo; said Microsoft chief executive Steve Ballmer, in a jibe directed at Google, which holds nearly 70 per cent of the global search market share.<br /><br />The marriage between Microsoft and Yahoo will propel Bing, which currently holds three per cent of the global market, to the second-largest search engine, with 12 per cent global search share.<br /><br />But analysts were doubtful that the tie-up could unsettle Google&rsquo;s hold, particularly in western Europe, where its share is closer to 90 per cent.<br /><br />&ldquo;A deal may shake up the industry in the US but as for the UK, it would probably have little or no impact at all &ndash; at least not in the short term,&rdquo; said Warren Cowan, chief executive of search marketing agency Greenlight.<br /><br />The partnership is forecast to generate income of $500m (&pound;305m) a year for Yahoo &ndash; which will keep 88 per cent of revenue generated on its sites over the first five years &ndash; and $200m in capital expenditure savings.<br /><br />The deal had been widely expected to include a one-off payment of $1bn &ndash; $2bn to Yahoo, suggesting Microsoft had the upper hand in negotiations. But Yahoo chief executive Carol Bartz said that the agreement &ldquo;comes with boatloads of value&rdquo;.<br /><br />The long-awaited partnership &ndash; expected since Microsoft&rsquo;s botched attempt to buy Yahoo for $45bn last January &ndash; should close in early 2010, subject to regulatory approvals.