Microsoft to hire 400 from Yahoo

The software company also agrees to pay $150 million to facilitate a new partnership with the Internet search engine.

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By Ben Rooney, staff writer

NEW YORK ( -- Microsoft has agreed to hire at least 400 Yahoo employees as part of the companies' new plan to share revenue on Internet search advertising, a regulatory filing showed Wednesday.

The software maker will also hire 150 of Yahoo's staff to assist with the transition, Yahoo said in a Securities and Exchange Commission filing.

Under the deal, which was announced July 29, search results on will be powered by Microsoft's technology. Yahoo, in turn, will be responsible for attracting premium advertisers.

Microsoft will pay Yahoo 88% of the revenue it gains from searches on Yahoo's sites. Microsoft will also have the rights to integrate Yahoo's search technology into its own existing Web search platforms.

To help implement the new partnership, Microsoft also agreed to pay the Internet search engine $150 million over three years.

The SEC filing revealed that Microsoft can end Yahoo's sales exclusivity deal after five years, but Microsoft would have to increase its revenue share rate to 93% for the remainder of the ten-year agreement.

The partnership is seen as a bid to challenge Google's (GOOG, Fortune 500) dominance in the lucrative market for Internet search advertising.

The deal, which is subject to approval by antitrust regulators, is expected to close in early 2010. The companies said they expect to face some antitrust scrutiny, and if the deal is not approved by July 29, 2010, Yahoo has the right to terminate the deal.

Microsoft (MSFT, Fortune 500) and Yahoo (YHOO, Fortune 500) shares were little changed in premarket trading.  To top of page

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Updated 9:31 am; adds details of the deal from SEC filing