Yahoo Gives In to Microsoft, Gives Up on Search

Microsoft Yahoo

In a long-awaited pairing aimed at taking on Google, Yahoo will handle ad sales while Microsoft gets the real prize: data on who’s doing what online.

Ever since Microsoft (MSFT) made its $45 billion bid for Yahoo (YHOO) in early 2008, it was clear the software giant was serious about taking on arch-rival Google (GOOG) in the lucrative Internet search business. And now, after years of talks with Yahoo, it seems Microsoft has achieved its goal. In a 10-year deal announced in the early hours of July 29, Microsoft became the clear No. 2 in a market long dominated by arch-rival Google.

Yahoo salespeople will continue to sell search ads that appear on both Yahoo sites and on Bing, and Microsoft agreed to let Yahoo keep 88% of the revenue on ads that appear on Yahoo sites. But Microsoft will nevertheless reap a reward that’s more valuable in the long run. The data on computer users’ online search and buying habits would ultimately reside on Microsoft’s computers, thereby improving its ability to automatically serve up the most relevant ads. “If Microsoft is running the underlying ad technology, it doesn’t matter who is selling the ads,” Sullivan says. “In the end, Microsoft will hold all the cards.”

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In the end END of it all.. will Microsoft REALLY hold all the cards?

Lemme Google that..