The 10-year deal, struck last July, is the biggest effort yet by Microsoft to establish an online business to rival Google, an area where Microsoft has lost $5 billion over the last four years.
The Justice Department's Antitrust Division said the deal was unlikely to substantially lessen competition.
US market participants had expressed support for the partnership as a way to create a more viable alternative to Google, the division said in a statement.
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Google, which did not oppose the partnership, did not comment specifically on the regulatory approval but said that there has always been "robust" competition in the search ad business.
How the deal works
The deal means Bing becomes the search engine for Microsoft and Yahoo sites, while Yahoo focuses on attracting big advertisers.
Microsoft will handle the automated auction of search ads for use on both companies' sites, and pay Yahoo a portion of search ad sales generated on Yahoo pages.
Microsoft is hoping that by making itself a single conduit for advertisers to access customers on both sites, it will become a credible alternative to Google.
Last month Yahoo handled 17 percent of US Internet searches, while Microsoft took 11.3 percent, according to comScore. Theoretically, that would now give Microsoft over 28 percent of search traffic, against Google's 65.4 percent.
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"At 30 points we are now a credible option, so that number matters," said Microsoft's Yusuf Mehdi, who is charged with making Bing and the MSN portal a financial success.
Globally, Google is even more dominant, with 90 percent of the search market compared with 7.4 percent for a combined Yahoo and Bing, according to November data from Web research firm StatCounter.
Fully complete early 2012
The Microsoft-Yahoo deal was broadly expected to gain approval, but some had thought the companies might have to alter the deal's terms.
The partnership took months to hammer out last year. It followed Microsoft's aborted $47.5 billion Yahoo takeover attempt the year before. Google abandoned its own advertising deal with Yahoo in 2008, which Microsoft opposed, under pressure from the US Justice Department.
Approval means Microsoft can begin the task of putting its Bing search engine into Yahoo sites. Neither company has laid out exactly how Yahoo's new search pages will look, but they will essentially be Bing searches with some customization of results by Yahoo.
The companies aim to get the partnership fully operational in the United States by the end of this year, with the transition of advertisers taking place before the holiday shopping season, if possible. The partnership should be globally complete by early 2012.
The deal had already been cleared by regulators in Australia, Brazil and Canada, but needed US and European approval to take effect. The companies said they are still working with regulators in Korea, Taiwan and Japan.
Source: http://www.prlog.org/10540601-how-yahoo-microsoft-deal-will-work.html
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