Microsoft’s plans to buy Yahoo’s internet search and search advertising businesses have been cleared by both European and US regulators.
Chris Green of DMG Europe said, “This deal gives Microsoft a bigger slice of the internet advertising business, but it is still miles and miles behind Google”.
Under the deal, Yahoo’s website will use Microsoft’s Bing search engine, and the two firms will share the revenues.
Microsoft is seeking to increase its share of the search engine industry, which is dominated by Google.
The European Commission ruled that the deal “would not significantly impede effective competition”.
Microsoft and Yahoo currently have less than 10% of the search engine market in Europe, while Google controlling 90%.
The Commission said its investigation showed that the deal was expected to “to increase competition & Microsoft become a stronger competitor to Google”.
In the US, the deal was also backed on Thursday by the Department of Justice.
Microsoft chief executive Steve Ballmer said “I believe that together, Microsoft and Yahoo will promote more choice, better value and greater innovation to our customers as well as to advertisers and publishers”.
Yahoo chief executive Carol Bartz said the two firms would be creating a “breakthrough search alliance”.
Under the terms of 10-year Microsoft-Yahoo agreement, Microsoft’s Bing search engine will power the Yahoo website, while Yahoo will in turn provide the main advertising sales team for Bing.
In exchange, Microsoft will retain 12% of the search engine revenues generated via Yahoo’s website for the first five years of the deal, while paying the remaining 88% to Yahoo.
In 2008, Microsoft offered $47.5bn (£30.4bn) to buy the whole of Yahoo, but its bid was turned down.