The long standing bond between Microsoft and Yahoo may be undergoing some drastic changes as renegotiations are extended for another 30 days

As reported by Reuters Microsoft and Yahoo have not reached an agreement and will therefore be continuing their talks about the direction their partnership will take over the coming years.

The Initial Relationship Was Made By Different CEO’s

The partnership was meant to be for a period of ten years initially, however the CEO’s of both companies have changed over the last five years.

Written into their agreement was the option, after 5 years, to renegotiate and even exit the contract, and since the original agreement was signed in 2010 – there is now the opportunity for either or both parties to end the relationship.

When the two companies decided to combine their efforts, forming what was referred to as the Search-Alliance, their intention was to increase their share of the search market and to put a dent in Google’s ever increasing dominance in the search world.

The Alliance Has Not Been A Success, So Why Continue?

Within the last five years there has been little change in the search market share of both companies. Combined their share of the market has floated between 29 and 31 % with Bing seeing slightly more of a growth, quite possibly at the expense of Yahoo.

Yahoo consolidated their new partnership with FireFox which gave them a temporary boost in user base. It appeared as though the tide might be moving in their favour, however users soon defected back to Google, robbing them of the their gains.

Yahoo CEO is Critical of the Search –Alliance

The current Yahoo CEO Marissa Mayer inherited the current relationship from former CEO Carol Bartz. Marissa Mayer has not been impressed with the fruit bared by the Search-Alliance, and has endeavoured to develop both organic and paid search advertising at Yahoo outside of their deal with Microsoft.

However as Yahoo depends on Microsoft for delivering its search capabilities, Yahoo will most likely not be looking to completely abandon their relationship at this stage. Recreating the infrastructure to provide the search services they once did would cost millions of dollars, and would require a great deal of commitment.

Bing however, are not so dependent on Yahoo. Since 2010 Bing has become more well-known as a big player in search and may not have much to lose from ending the alliance.

The result of the negotiations should soon reveal where each party stands, and it is highly probable that the terms of their deal will have changed.