Microsoft and Yahoo finally tie the knot

Microsoft and Yahoo will be hoping to challenge Google in the search market

Microsoft and Yahoo have finally completed their much-publicised deal which will see the former's Bing search technology powering Yahoo search.

The two tech giants said in a brief statement yesterday that they had " finalised and executed the definitive search and advertising services and sales agreement and licence agreement" which was announced back in July.

"Microsoft and Yahoo believe that this deal will create a sustainable and more compelling alternative in search that can provide consumers, advertisers and publishers with real choice, better value and more innovation," the statement read.

"Yahoo and Microsoft welcome the broad support that the deal has received from key players in the advertising industry, and remain hopeful that the closing of the transaction can occur in early 2010."

The deal is widely seen as an attempt to challenge market leader Google, which has close to three quarters of the worldwide search market. A combined Yahoo and Microsoft would command just under a third, according to the latest estimates.

Under the terms of the deal Yahoo will keep its search interface and receive 88 per cent of traffic acquisition costs for the first five years, and 93 per cent in the second half of the 10-year deal.

Bing has made steady progress since its launch earlier this year and has impressed the critics, but commentators still believe that it will take much more to seriously threaten Google's dominant position.