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EU approves deal between Microsoft, Yahoo
February-20-2010

The European Union (EU) approved on Thursday Microsoft's proposed acquisition of Yahoo's search business, saying the deal "would not significantly impede effective competition" in the European market.

The European Commission, the executive arm of the EU, said in a press release that the combined market shares of the two companies in Internet search and online search advertising are "very limited."

Within the European Economic Area, the two companies' combined market shares are below 10 percent, while those of Google are above 90 percent, according to the press release.

"First phase market investigation has shown that not only market participants do not expect the transaction to have any negative effects on competition or on their business but they also expect it to increase competition in Internet search and search advertising by allowing Microsoft to become a stronger competitor to Google," the Commission said.

Under the 10-year agreement between Microsoft and Yahoo, Microsoft's Bing search engine will process search requests and steer search-related ads on Yahoo. Yahoo is due to get 88 percent of the revenue generated from the ads placed alongside the search results on its sites.

The two companies will begin implementing the deal in the coming days by shifting Yahoo's search platforms to Microsoft. They plan to move most advertisers and publishers before the 2010 holiday season. The final step of the process is expected to be completed by early 2012.

The deal was notified to the Commission for regulatory clearance on January 15, 2010.