Background

In December 2009, Microsoft and Yahoo finalised an agreement to combine search engines. Under the terms of the deal, Microsoft will acquire an exclusive licence to Yahoo’s search technologies for a period of 10 years. Thus, Yahoo’s search engine will be powered by Microsoft’s Bing and Yahoo’s search-advertising platform, Panama, will be transferred to Microsoft. Adverts will continue to appear on Yahoo’s platform but the company will receive revenue (less a certain amount of commission paid to Microsoft) from search advertising only if an advert is clicked on through Yahoo’s own visible page and not Microsoft’s.

Antitrust issues

The deal was notified to the Commission as a merger on 15 January 2010, following a number of months of pre-notification discussions.

The Commission will study whether the deal could lead to a decrease or elimination of the incentives for these companies to continue innovating in those markets or whether the merger is pro-competitive in that it could lead to the creation of a stronger competitor, better placed to compete against market-leader Google.

What next?

Unconditional clearance decisions have recently been obtained in both Australia and Canada and it is being argued that the European market structures are similar to those in Australia and Canada where Google is the biggest player. On that basis, most commentators expect an unconditional clearance to be granted. However, the issues are not completely clear (see our briefing from October 2009).

The provisional deadline for the Commission’s decision is 19 February 2010.