Update: Yahoo and Microsoft extend the deadline to close search deal

The companies originally planned to finalize the deal by October 27; they now say the deal will be done by early 2010

Yahoo and Microsoft have missed a deadline for finalizing their search and advertising deal and have now extended the deadline for an unspecified period.

When the companies announced in July that Microsoft's Bing search engine would power Yahoo's search results, they said that they planned to finalize the deal by Oct. 27 or use an arbitration panel to hammer out their differences.

[ The Microsoft, Yahoo deal was a long time in the making. | Discover what's new in business applications with InfoWorld's Technology: Applications newsletter. ]

In a filing with the U.S. Securities and Exchange Commission on Wednesday, Yahoo said the companies have agreed to extend the period to negotiate and execute the deal.

"Given the complex nature of the transaction, there remain some details to be finalized," Yahoo said in the filing. "The parties are working diligently on finalizing the agreements, have made good progress to date, and have agreed to execute the agreements as expeditiously as possible."

The filing does not provide a new deadline for finalizing the agreement.

In a joint statement, Microsoft said it was committed to the agreement and that the companies had mutually agreed to extend the deadline.

"We plan to do this as expeditiously as possible. Both companies are optimistic that we will be able to close this deal by early 2010," Microsoft said.

Given the tremendous pressure on both companies to close the deal and start implementing it, they may very well be close to finishing their negotiations despite missing the deadline, said Greg Sterling, of Sterling Market Intelligence. "To some degree time is really an important factor," he said.

Over the past 18 months or so there has been great uncertainty surrounding Yahoo, he said. "Yahoo really suffered a huge brain drain as a result of that uncertainty and lack of focus. You really get the sense that Yahoo has been bloodied by all the contortions and lack of clarity around its strategic direction," he said.

In fact, on Wednesday, Yahoo executives spent the day at an analyst conference "trying to restore confidence across the board," Sterling noted.

Microsoft is under almost equal pressure to get the deal moving, he said. While Microsoft's new search engine, Bing, has seen growth since it launched, that growth has been relatively slow and hasn't had much of an affect on market leader Google. The Yahoo deal is an important strategic move for Microsoft, he said.

It might be a good sign that the companies have not said they are turning to an arbitration panel, per their initial plan, or set a new deadline. "Maybe they're close. Maybe it's a work-over-the-weekend kind of thing," Sterling said.

Yahoo and Microsoft initially estimated it would take them two years to fully implement the deal, which also involves Yahoo providing premium search advertising services for both companies.

The deal is facing an antitrust review by the U.S. Department of Justice. That review can take place even without the companies having finalized their deal because the DOJ is analyzing its broader competitive impact, which it can do based on the details the companies have already provided, Sterling said. Also, the companies were probably keen to have the DOJ begin any investigation as soon as possible so as not to further delay the deal's implementation, he said.


Mobile Security Insider: iOS vs. Android vs. BlackBerry vs. Windows Phone
Recommended
Join the discussion
Be the first to comment on this article. Our Commenting Policies