Microsoft, Yahoo! near deal on search partnership: Report

Microsoft and Yahoo! Inc. are close to finalising a deal on a search partnership that would let them better compete with search-advertising leader Google, acording to The Wall Street Journal.

The deal, which could be reached as early as today though the possibility of a delay cannot be ruled out, involves Yahoo! agreeing to use Microsoft's search engine on its own sites, the Journal said.

The two companies have been negotiating the terms of the transaction for weeks, but couldn't reach an agreement.

Most of the negotiations have been over an upfront payment to Yahoo!, speculated to be in the range of $500 million to $1 billion. The size and specifics of the upfront payment have been a sticking point, including whether it is a simple payment for the deal or a guarantee of future revenues.

In a shift from earlier discussions, Yahoo! would handle selling the text ads that appear next to the search results for its sites and some Microsoft sites, boosting Yahoo!'s share of the search advertising business, the Journal.

According to comScore, Google had 65 per cent of the search market in June, Yahoo! had 19.5 per cent, and Microsoft had just 8.4 per cent despite the launch of its Bing search engine in June.