It has not been a good couple of weeks for Microsoft, at least not when it comes to how the online search space is fanning out anyway. Following on from the refusal of yahoo to take the Microsoft buy out bid seriously, comes the news that it is jumping into bed with Google instead. If it were not bad enough that Yahoo didn't see the Microsoft bid of some $9 billion in cash and $1 billion every year in a revenue sharing scheme as serious enough, the news that it had decided to opt for an advertising deal with Google must have been hard to swallow. Especially when you examine the terms of that agreement, which seem to suggest that as far as Yahoo is concerned Google is the real powerhouse and not Microsoft.
We all know by now that the deal means Google places search ads on Yahoo next to results, and that Yahoo reckons this will be worth some $800 million in annual revenue, boosting cash flow by as much as $450 million over the course of the next year. But what is only just coming to light are the terms of that arrangement, and particularly the ones that pertain to what happens if Yahoo is bought out in the next couple of years.
Amazingly, Yahoo has agreed to a kill fee with Google that would see it paying a stonkingly large $250 million settlement if ownership changes, or even if 50 percent of voting rights move to a third party. This gives the impression that while Yahoo genuflects before Google, Google itself is keeping an eye on those third parties out there - also known as Microsoft I suspect. But there is little doubting who holds the leverage in the online world at the moment, and that is Google. Or is it? Given the nature of this deal, and the power it hands over to the Yahoo-Google alliance when it comes to online advertising, there is still a slim chance that the real leverage will yet be determined to be with the official regulators...