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Yahoo Chooses to Stay with Microsoft in Upgrade Search Deal

yahoo ap ces 635x475Yahoo and Microsoft will keep working together on internet search, but Yahoo is getting more control over the how the search results are presented.

The agreement announced extends a search partnership that Yahoo Inc. and Microsoft Corp. forged in 2009 while they were being led by different CEOs. Current Yahoo CEO Marissa Mayer had the option of terminating the relationship under a clause triggered earlier this year.

The two are trying to chip away at Google’s dominance of internet searches. They haven’t had much success so far. Google still controls two-thirds of the US search market and holds an even larger share in Europe. Mayer spent 12 years helping Google build its lucrative lead in before becoming Yahoo’s CEO in 2011.

As has been the case since the companies formed their alliance, Microsoft’s technology will power most of the search results on Yahoo’s sites. In return, Yahoo will receive most of the revenue from the ads posted alongside the search results on its sites.

The original deal called for Microsoft to pay 88% of the search revenue to Yahoo. The companies said their economic arrangement won’t change under the revised agreement.

The revised contract gives Yahoo more control over the how its search page looks and works. There will be a few differences in how the companies sell ads under the new agreement.

Investors evidently don’t think much is going to change. Yahoo’s stock gained 15 cents to $45.88 in Thursday’s afternoon trading while Microsoft shares added 6 cents to $42.32.