Microsoft and Yahoo! will begin integrating their search businesses within days, after European and US regulators approved a proposed partnership between the two firms.
Yahoo! will use Microsoft's Bing to power searches on its website, and manage premium search advertising for both companies. Microsoft will take 12% of search engine revenue from Yahoo's websites, with Yahoo! taking the remainder.
The companies are aiming to complete the search engine transition in the US by end-2010, with all customers and partners to be migrated by the end of 2012.
The European Commission decided that the 10-year agreement does not pose a threat to competition because of Google's dominance.
“In the EEA, Microsoft's and Yahoo's activities in internet search and online search advertising are very limited with combined market shares generally below 10%. Google, by contrast, generally enjoys market shares above 90%,” the Commission said.
Far from hampering competition, the merger will in fact allow the parties to become competitors to Google, the Commission added.
But DMG Europe technology analyst Chris Green told the BBC that he was doubtful that the merger will improve the duo's chances against Google.
“The deal with Yahoo should turn [Bing] into a not-too-shabby and profitable world number two search engine - but still no Google.”