Jennifer Zaino
SemanticWeb.com Contributor

Microsoft and Yahoo are together at last, having just signed a 10-year deal where Microsoft’s Bing will power Yahoo! search, and Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers.

Yahoo! will continue to use its technology and data in other areas of its business, a press release on the deal also said. During a conference call this morning to discuss the deal, Yahoo! CEO Carol Bartz and Microsoft CEO Steve Ballmer responded to a question about the deal’s impact as it relates to internal search in Yahoo! properties such as del.i.cious.

“We’ve been talking about web search,” said Bartz. “When we talk about internal Yahoo! search that is some of the innovation we’re looking at doing. That’s one of the issues we really needed to work out.”

At what point, for example, does Yahoo take and link information from Bing and do something on top of it as opposed to what it does horizontally, she said. With such things in mind, a key component of the deal was that Yahoo! would have full flexibility on what it can do inside its sites, she said; earlier she had noted, in response to a question about how Yahoo can innovate if Microsoft is in charge of the technology, that a lot of innovation happens above the search results.

Ballmer was quick to confirm Bartz on the flexibility point. “We’re anxious to see Yahoo! take full advantage in various parts of its network through our search technology, so it was important to structure an agreement that gave Yahoo! full flexibility,” Ballmer said. “Exactly where that will play off, Yahoo’s team I’m sure will tell you over time.”

Better value for advertisers?

But innovation in search should extend beyond the technology, Bartz said. The deal is touted as delivering not only more innovation in search but a better value for advertisers, who will benefit from its scale and enjoy greater ease of use and efficiencies working with a single platform and sales team, according to the companies.

“I think we should talk more often about the innovation on the sales and marketing side of it,” Bartz said. “Online advertising is in its pre-infancy and how we work together with the large CMOs and marketers and large agencies to really bring digital advertising to …where it should be, considering the amount of time consumers are spending online, is also innovation that Yahoo! is ready to step up to.”

Both parties emphasized that one of the factors that made the deal work this time around was that they spent a lot of time defining the partnership.

“We were really trying to run a long-term business to invest for our success and our future,” said Bartz. “We felt this is a true partnership with technology and selling….. Both have real skin in the game and there’s real excitement around it. The most important thing for us is that Yahoo! needed to get focus and focus again on what our mission is-to be the center of people’s lives online, and that is about great content on audience properties, a great mobile experience, and powered, again, by this technology that Microsoft has stepped up to.”

Speaking of mobile experiences, Yahoo! has the option of using Microsoft’s technology for its mobile platforms, but Bartz also emphasized that that is an option and not an exclusive requirement as it is on the PC end. “If somewhere down the road we wanted to switch, we could,” she said.

“It’s not like we came here with a two-page term sheet,” Ballmer added on the point of how the companies got the deal to work out this time around. “There are well over a hundred pages written to describe what we’re doing. It’s important to say this is what we were spending our time on.”

It wasn’t high-level abstractions, he said; rather, they worked through the operating principles of what the co-operation looks like in the partnership, “and that made us confront a lot of issues.” For more information on the specifics of the deal, you can find the press release at their joint web site.

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