San Francisco - Microsoft and Yahoo are close to signing a deal to collaborate on search and advertising in a bid to challenge Google's overwhelming dominance. Bloomberg financial news serfice Friday reported that the two companies could reach a deal as early as next week, though the deal could still disintegrate. The two companies refused to comment on the reports.
Google controls some 65 per cent of the US internet search with Yahoo ranked a distant second with 19.6 per cent and Microsoft third with 8.4 per cent.
Microsoft almost bought Yahoo last year for 47.5 billion dollars but the move was scuttled at the last minute by Yahoo co-founder and CEO Jerry Yang, who later resigned following widespread criticism. Microsoft has since refused to revive the buyout offer, but Yang's successor Carol Bartz confirmed in May that the two companies were holding talks on search collaboration.
News of the deal came just weeks after Microsoft launched its new search engine Bing, which has been widely praised as a worthy competitor to Google.
The All Things D blog on the Wall Street Journal said top Microsoft executives were in Silicon Valley to discuss the deal which involves the software giant paying Yahoo billions of dollars plus recurring payments to take over Yahoo's search advertising business.
Advertising linked to search terms is the most lucrative business strategy on the internet. On Thursday Web search giant Google reported a 19 per cent increase in second quarter profits to 1.48 billion dollars from 1.25 billion dollars a year ago.
