Reports: Microsoft-Yahoo deal to come in next 24 hours

Updated at 6:30 p.m. and 11:50 p.m. PDT with additional details.

For more than a year now, rumors of a potential deal between Microsoft and Yahoo have ebbed and flowed. And it looks like the denouement of this epic tale may finally be upon us. A search and advertising deal between the two tech giants is expected to be announced within the next 24 hours, according to All Things D's Kara Swisher, who cites multiple unnamed sources.

It wasn't clear if a final deal had been signed, Swisher said Tuesday afternoon, but negotiations have apparently wrapped up. One sticking point late in the discussions came when Microsoft bristled at Yahoo's request for an upfront payment on the order of several hundred million dollars and revenue guarantees that would have meant billions of dollars over the course of the deal, according to Ad Age. But executives apparently worked through that kink and are now putting the finishing touches on an agreement.

According to All Things D and a separate report from Ad Age, Microsoft's search technology will power the search bars on Yahoo's pages. However, Yahoo will still sell search ads on its site and on Microsoft's Bing, according to the reports, which means Yahoo will be able to maintain the relationship with large advertisers interested in both display and search ads. In addition, Yahoo will be entitled to 110 percent of revenue generated from search ad sales for the first two years of the deal, according to All Things D. In the third year, that number will drop to 90 percent.

Yahoo has not responded to requests for comment on a potential deal. Microsoft declined to comment. Stay tuned for more as this story unfolds.

Tom Krazit contributed to this report.

[baconstang]

Should be great... the marriage of two over-the-hill companies of a decade or two ago.

[solitare_pax]

Looks like the old media is preparing to circle the wagons.

[baconstang]

Isn't Time spinning off AOL? Maybe MS could land that puppy too.

[Mr. Dee]

Microsoft is an over the hill company that makes billions per year that Google, Facebook, Twitter (other wise known as one trick pony useless companies) can only dream of.

[Altotus]

Microsoft needs Yahoo bad. Its the future of Microsoft were talking. Just had to have it soo bad oh yeah. This is vision in action its not what is but what will be if things go right.

[Inconnux]

Yahoo is a dead company, constant interface changes and idiotic intrusive ads killed they ages ago... I can't see why Microsoft even bothers.

[stickfu]

@ Mr Dee, Microsoft`s glory days are behind them, they may make billions but they hemorrhage billions as well. This is a knee jerk reaction from a dinosaur, no innovative thought just reactionary measures.

[technewsjunkie]

Hope this doesn't happen.
It would be another example of Microsoft buying their way in to a market someone else invented and Microsoft completely missed. History is replete with examples.

[monkeyfun14]

What the hell does it matter to you?

[Akiba]

How is it any different than Google buying Youtube?

[cool1357]

and how the heck is this different from Goog buying DoubleClick & Grand Central... all they did was search which is now gonna change BIG time with YHOO and MSFT...

go and tell your goog to first remove BETA tag from other of its products before I start using them... huh...

[Mr. Dee]

Another example of the lack in research and just obnoxious hate for a Company because its size. Look at all the acquisitions by Oracle and IBM of late. You see those applications used in iLife by Apple such as iDVD, iMovie, those were bought, so was iTunes and most of the Pro applications. You know what Apple did in the process after purchasing these Companies? They killed the Windows and Linux versions. You sit there in your little world saying that Microsoft forming a competitive deal with Yahoo! against the number Search and Ad sense Company is wrong - ridiculous. technewsjunkie, please stop using computers for the sake of man kind, it would do us all some good.

[walletless]

how is this different from:
* Google buying Orkut to start social networking
* Google buying birds eye to start Google maps
* Google buying Android to start Android
* Google buying a bunch of companies to start its online google docs
* Google buying youtube to replace its dying video search
* Google buying doubleclick to get personalized ads
* Google buying Postini to get spam filters for gmail
* Google buying Grandcentral to start its voice
* Google buying blogger and picassa

[walletless]

Sorry I meant "keyhole" not "birds eye" for maps. btw goog also bought where2 to spur up their maps offerings.

[jessiethe3rd]

Hey... I won't pick on the obvious ignorance you have. Just be adviced that forming opinions based on hating on MSFT, the popular thing to do, doesn't mean your opinions apply to everything MSFT. Go do some research or something then make a rational comment.

[stickfu]

@ Mr Dee, is this the reason you`re such a Microsoft apologist?

http://boycottnovell.com/2009/02/01/andre-da-costa-schwag/

right Andre?

[t8]

We all wait with bated breath as to what 2nd and third place can come up with.
A deal will mean that Microsoft can claim second and Yahoo can claim it too, as they probably think in time they will slip to third place.

While second is admirable, if it is 15% of the market while no1 is 65%, then second place is not that as good as it sounds.

In the mobile sector, Google has over 90% of search.

[Random_Walk]

...they'll end up with a combined marketshare of less than 20%?

[jessiethe3rd]

In mobile search - this primarily has to do with Opera browswer dominance which forces one to use Google Search. this will end sooner or later.

[t8]

@ jessiethe3rd

Yeah it will probably end when most smartphones ship with Android and Chrome.

[cool1357]

and how the heck is this different from Goog buying DoubleClick & Grand Central... all they did was search which is now gonna change BIG time with YHOO and MSFT...

go and tell your goog to first remove BETA tag from other of its products before I start using them... huh...

[xaduurv]

I believe they already have

[PhaseDMA]

Your missing out if you decide to not use a program simply because of what version the developer decides to put the software at. There are plenty of programs that's version numbers are very high with their bugs just as high, and just as many with low version numbers and very few bugs. Same holds true for features.

[lonestarState]

Well what ever happens I will continue to use my own custom search that I made at BuildaSearch.com. MicroHoo! Hoo Let the Dogs Out!

[Mr. Dee]

We all don't have time to waste like you.

[ITcomposer]

Really interesting,MS is doing this just to become the second banana, i wonder, whats gooing to happen with the FACEBOOK, REVISION 3 ad investments hmmm anyone think of that>

Since yahoo will run the ads,whats gona happen to MS AD CENTER?

[jessiethe3rd]

It will all be ran on the adcenter platform. :)

[Inconnux]

Microsoft should build their search engine around a usable Social networking site and put that horrible interfaced 'Facebook' out of business..

[PhaseDMA]

Like or dislike for Facebook aside the chances of Facebook losing their control of social market share I expect is about as good a chance of Google losing control of their search market share.

[stickfu]

Only problem is that Microsoft can`t build anything without someone else to show them how.

[Inconnux]

Facebook could easily lose control of the social market share... they took it from Myspace which was the giant at the time. Myspace was arrogant and thought if they covered half your page with intrusive ads people would just stick around. Facebook is also arrogant with its constant idiotic abortion interface changes, so all the market needs is another company to come around to give people a viable option. If Microsoft built a social network around its search engine, many people who are sick of Facebook and their arrogance would switch.

Just remember, Yahoo was the 'Google' of the 90's and they lost all their market share to Google because Google offered a simple, intuitive interface that gave results. The same thing could EASILY happen to Facebook.

[carltonleesg]

Yuck! They screwed up Hotmail and my Hotmail account big time. I escaped to the better land of Yahoo! I know its just a matter of time until they screw up Yahoo! Good thing Google offers Gmail.

[Mr. Dee]

I hope you are enjoying the spam at Yahoo! Mail.

[sadchild]

"microhoo" sounds stupid. i keep telling people to refer to the deal as "yacrosoft". because it makes me want to yack!