Microsoft and Yahoo rumoured to be finalising deal

Several reports have surfaced today indicating that a Microsoft and Yahoo! deal is "imminent".

24/7 Wall Street is reporting that under the terms of the agreement, Yahoo! will be paid $3 billion upfront and will get 110% of the revenue that its searches provide after traffic acquisition costs in each of the first two years. In the third year, that figure would go to 90%.

Top executives at Microsoft–including SVP of the Online Audience Business Group Yusuf Mehdi and others have reportedly flown to Silicon Valley to iron out the final details of the deal. It's expected that Microsoft will pay Yahoo cash upfront to take over its search advertising business.

Microsoft has been in talks with Yahoo for nearly 2 years, during which time Microsoft has evaluated a takeover bid, seen Yahoo reply to it's ultimatums and nearly miss out on a deal when Yahoo attempted to partner with Google. The Yahoo-Google partnership failed due to regulatory concerns.

According to figures from ComScore, in June Google held 65% of the search market in the US, with Yahoo at 19.6% and Microsoft on only 8.4%. If the Microsoft Yahoo deal takes place then this will bring Microsoft up to nearly 30% market share in the US, tripling its current current share.

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