MSN sticks with Overture

Yahoo's Overture Services subsidiary on Friday announced it will continue to offer commercial search links to Web rival MSN.

Overture's paid search results will remain a part of MSN Search in the United States and the United Kingdom through June 2005, the company said. MSN has served as one of Overture's largest partners, contributing about a third of Overture's revenue this year.

The agreement is significant because it flies in the face of speculation that MSN would abandon this partnership for competitive reasons. Overture was recently acquired by Yahoo for $1.7 billion, putting Microsoft, which owns MSN, in an uncomfortable position with one of its biggest adversaries. The previous agreement between the companies allowed MSN to exit the relationship early in the event that Overture was acquired.

Since Yahoo and Overture announced their intention to merge, Microsoft had maintained that it would not drop Overture before its contract expired in 2004. Microsoft executives added that they would nonetheless try to build their own commercial search business as part of an effort to become a Web search leader.

MSN's partnership with Overture remained lucrative, according to MSN executives--perhaps too lucrative to abandon.

Overture auctions off search terms to advertisers, who then pay the company a fee every time a Web surfer clicks on their link. Overture's deals with Web portals Yahoo and MSN have proved mutually beneficial. Every time a Yahoo or MSN user clicks on an Overture-hosted link, Overture pays the portals a percentage of the fee.