Microsoft, Yahoo Finalize Search Partnership

The agreement makes it easier for Microsoft and Yahoo to work together against common search rival Google than it had been for the companies separately.

In the agreement, Yahoo and Microsoft in July said they will work together in the online search and advertisement business, with Microsoft's Bing powering Yahoo's search capabilities and Yahoo becoming the exclusive worldwide relationship sales force for both companies' premium search advertisers.

Under the terms of the agreement, Microsoft will compensate Yahoo through a revenue-sharing agreement based on traffic generated on Yahoo's online properties and will pay Yahoo traffic acquisition costs at an initial rate of 88 percent of generated search revenue. Each company maintains its own display advertising business and sales force.

The two companies on Friday issued a joint statement in which they wrote, "Microsoft and Yahoo! believe that this deal will create a sustainable and more compelling alternative in search that can provide consumers, advertisers and publishers real choice, better value, and more innovation.

"Yahoo! and Microsoft welcome the broad support the deal has received from key players in the advertising industry and remain hopeful that the closing of the transaction can occur in early 2010."

No other information was available at press time from the two companies.

Rick Whiting contributed to this article.