Update: 29 July, 2009 @ 10:12 AM

Yahoo! and Microsoft have published simultaneous press releases which confirm that a deal between the one time rivals has been finalized.

A full list of the deal’s points are contained in the press releases, but we’ve boiled that list down into a selection of essentials:

• Microsoft will acquire an exclusive 10 year license to Yahoo!’s core search technologies, and Microsoft will have the ability to integrate Yahoo! search technologies into its existing Web search platforms.
• Bing will be the exclusive algorithmic search and paid search platform for Yahoo! sites.
• Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. Self-serve advertising for both companies will be fulfilled by Microsoft’s AdCenter platform.
• Each company will maintain its own separate display advertising business and sales force.
• Yahoo! will innovate and “own” the user experience on Yahoo! properties even though it will be powered by Microsoft technology.
• Microsoft will compensate Yahoo! through a revenue sharing agreement on traffic generated on Yahoo!’s network of both owned and operated (O&O) and affiliate sites.
• Microsoft will guarantee Yahoo!’s O&O revenue per search (RPS) in each country for the first 18 months following initial implementation in that country.

Original story: 29 July, 2009 @ 1:28 AM
A source close to the renewed negotiations between Microsoft Corp. and Yahoo! Inc. has confirmed that the dot com giants have struck an agreement that will be announced within 24 hours.

The terms of the alleged agreement upholds rumors of a revenue sharing model, while dashing gossip that Microsoft would foot an up-front payment of some $3 billion said the source, who wished to remain anonymous as the deal has not been announced.

Rumors of a renewed effort to unite Yahoo! and Microsoft against Google broke two weeks ago Friday when 24/7 Wall Street revealed that sources inside a major client of the investment firm ThinkEquity said that a deal was “imminent.” Secondary sources supported the rumors with reports that key Microsoft search execs were at the Yahoo! campus in Silicon Valley to hash out the “short strokes” of a deal.

With the short strokes apparently drying, the purported deal is also said to ink a Yahoo! switch to Bing search results and the adoption of Microsoft technology for advertising sales.

But as Reuters notes, a combination of the second and third largest search outfits will certainly trigger scrutiny, if not ire from antitrust regulators. Similarly, regulators may gut a key advantage to the deal by restricting Microsoft’s ability to share search data with its business partner — not acquisition — Yahoo! Inc.

Despite the potential for legal wrangling, shareholders have continued to see value in a Microsoft/Yahoo! agreement. ComScore’s June search statistics suggest that the two companies are merely trading blows for their respective shares, rather than growing the business by eroding Google. The stats reveal that Google held steady at 65 percent while a 0.5 percent drop in Yahoo! search coincides with the $100 million introduction of Bing. A deal that unites Yahoo! and Microsoft’s search divisions could do away with the share-exchanging wheel spinning and unite 30% of the market under one roof.

Both companies have predictably declined comment.