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Microsoft and Yahoo Sign on the Dotted Line

Microsoft and Yahoo quietly announced Friday that they have finally signed off on their landmark search in exchange for ad revenues deal.

The agreement between Microsoft (NASDAQ: MSFT) and Yahoo (NASDAQ: YHOO) has been almost two years in the making.

Most recently, the two companies revealed in late October that there were still details to be worked out before they could sign the agreement.

"Yahoo Inc. and Microsoft Corporation today announced that the companies have finalized and executed the definitive Search and Advertising Services and Sales Agreement and License Agreement in accordance with the letter agreement announced in July," the companies said in a brief joint news release late Friday.

Microsoft and Yahoo first announced on July 29 the ten-year deal that will have the Redmond software giant provide its Bing search engine to Yahoo's sites in return for a share of the sites' advertising revenues.

The main thrust of the agreement is to create a single entity to compete against Google (NASDAQ: MSFT) in the global search engine market.

Web analytics firm comScore's (NASDAQ: SCOR) latest search engine statistics for U.S. searches in October -- the most recent month the firm has tracked -- show that Bing reached 9.9 percent share. That's still puny compared to Google's share in October of 65.4 percent.

However, a combination of Bing's and Yahoo's search numbers would yield a 27.9 percent combined share, a much stronger rival to Google than either one alone.

"Microsoft and Yahoo believe that this deal will create a sustainable and more compelling alternative in search that can provide consumers, advertisers and publishers real choice, better value, and more innovation," said a Microsoft statement e-mailed to InternetNews.com.

Next on the list of hurdles to leap, according to the two companies, is approval by U.S. regulators, as well as approval within the European Union (EU), which may or may not require the approval of the European Commission, due to differences in laws among EU nations.

"We welcome the broad support 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 joint statement said.