MS-Yahoo Search Deal Discludes China

It's only been a few days since the Microsoft-Yahoo search agreement was finalized and already the new tandem is being criticized.

Concerns were raised over the fact that the companies billed their union as a "global" partnership. The fact is that both companies were founded (and are currently headquartered) in the United States. According to some experts, this is a minor snafu -- but the technicality does raise a valid concern. What happens to the international Yahoo search affiliates?

Yahoo China not Included in Deal

It has now been made clear that the Microsoft-Yahoo search agreement will not affect any Yahoo-owned properties in China, because the branch of Yahoo search situated in this area of the world is controlled by e-commerce giant Alibaba Group.

An Alibaba Group representative confirmed the separation of Yahoo U.S. and Yahoo China affairs saying "Yahoo China is managed independent of whatever Yahoo U.S. chooses to do". A statement released by Microsoft-Yahoo echoed these sentiments saying that "Yahoo will continue to syndicate its existing affiliate partnerships".

In 2005, Yahoo obtained a 40 per cent stake in Alibaba Group. As part of that deal, Yahoo gave control of its China operations to Alibaba. (Source: yahoo.com)

Yahoo Microsoft Merger: Breaking it Down

The breakdown of the Microsoft-Yahoo search agreement is as follows:

The algorithm used in the Microsoft Bing search engine will also power Yahoo searches for the next ten years. Yahoo, in exchange, will sell premium search advertising services in the interest of both companies. As a bonus for Yahoo, in exchange for added traffic, Microsoft will dole out an 88% cut of the search engine revenue stemming from the sites that are owned and operated by Yahoo. (Source: pcworld.com)

Neither Microsoft nor Alibaba representatives would comment when asked if the companies have had talks to include the Yahoo China wing into the U.S. search merger.

However, Microsoft CEO Steve Ballmer has met with Alibaba CEO Jack Ma twice in the past six months (once in the U.S. and once in China), so a potential "global" Microsoft-Yahoo search partnership is not completely out of the question.