Microsoft, Yahoo extend contract for Web ads

Microsoft has extended its partnership with Yahoo to deliver sponsored search results on its U.S. and international MSN sites, despite the software maker's recent declarations that it intends to be a major force in the search market.

Microsoft has extended until June 2006 its agreement with Yahoo subsidiary Overture Services Inc. to deliver the pay-for-performance results, it said Thursday.

The agreement was initially undertaken in 2001 and was due to expire in June 2005, an Overture spokeswoman said. There has been no changes to the terms of the contract, the spokeswoman said. Financial details were not disclosed.

Microsoft's decision to lengthen its search partnership with Yahoo comes at a time when the software maker is sharpening its own tools and expertise in the area. Microsoft rolled out a beta of its long-awaited search technology last week, while company executives proclaimed their intentions to take on search leaders Google and Yahoo.

Experts have said that the Redmond, Washington, company's search technology as still in callow form, however, and this factor may have contributed to the decision to extend its agreement with Yahoo.

Under the extension, Overture will continue to provide sponsored results to MSN sites in the U.S., Canada, Europe, and Asia.