Microsoft and Yahoo likely to end US search alliance as Google remains market leader

Internet giants Yahoo and Microsoft failed to make progress with their renegotiation of a ten-year search deal that was made by the companies' former bosses to rival Google.

The companies have extended the deadline to re-negotiate the deal by 30 days, signalling a possible break-up between them.

The partnership agreed in 2010 allowed Yahoo to use Microsoft Bing's search technology and Microsoft's search-based advertising system. The partnership was pioneered by Carol Bartz and Steve Ballmer, who were heading Yahoo and Microsoft respectively.

The agreement included a provision for Yahoo to exit its search alliance with Microsoft within a 30-day period after 23 February, 2015, provided Yahoo's 12-month average revenue per search in the US was less than an undisclosed percentage of Google's estimated 12-month average revenue per search in the US.

In a regulatory filing, Yahoo said the companies amended the terms of the search alliance agreement, extending the time until late April to terminate the deal.

According to the initial agreement, the search alliance would remain in effect for another five years if there was no exercise of option to exit. Therefore, the extension could mean that Yahoo may be planning to opt out of the alliance.

Microsoft and Yahoo declined to comment on the negotiations.

Before the partnership, Microsoft and Yahoo together handled about 28% of Web searches in the US. In February, their combined market share amounted to 32.6% of US desktop searches, while Google controls roughly two-thirds of the US search market, according to comScore Inc.