What are the exact deal terms of the Microsoft and Yahoo search deal?

The term of the agreement is 10 years; Microsoft will acquire an exclusive license to Yahoo’s core search technologies, and Microsoft will have the ability to integrate Yahoo search technologies into its existing web search platforms. Yahoo will become the sole sales representative for both companies’ premium search advertisers. Both will maintain their own separate display advertising business and sales force.

Yahoo will own the user experience on Yahoo properties, including the user experience for search, despite it being powered by Microsoft technology. They will have a revenue sharing agreement on traffic generated on Yahoo’s network. Microsoft will pay traffic acquisition costs to Yahoo at an initial rate of 88% of search revenue generated on Yahoo.

Microsoft will guarantee Yahoo's revenue per search (RPS) in each country for the first 18 months following initial implementation in that country. Yahoo estimates that this agreement will provide a benefit to annual GAAP operating income of approximately $500 million and capital expenditure savings of approximately $200 million. Yahoo also estimates that this agreement will provide a benefit to annual operating cash flow of approximately $275 million.

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