Microsoft and Yahoo have officially signed an agreement. After years of speculation, Microsoft’s dream has become true and the company agreed a partnership with Yahoo that will see Microsoft power Yahoo search using Bing, while Yahoo will be in charge of the sales with search advertisers. Microsoft and Yahoo deal is about innovation as the two giants will combine their strengths in order to provide the best services and to make the search market more competitive.

Carol Bartz says that this deal will have benefits for the company itself, for the users, and for the industry. The Microsoft-Yahoo partnership will be the foundation of the future of the Internet, continued Yahoo’s CEO. She said that advertisers will no longer have to rely on only one search technology, and now Google has a competitor. Although Microsoft and Yahoo joined forces, the companies don’t meet Google’s market share which stands at about 65%, however, Bing is growing and its traffic is increasing every day.

On the other hand Steve Ballmer is also emphasizing search innovation, and the “better value for advertisers.” Microsoft’s CEO said that until now consumers haven’t had any choice as Google had (and still has) it all. Microsoft and Yahoo can provide competition for Google thanks to Bing, and Yahoo’s position as a leading online media company.

Here are the terms of the Microsoft-Yahoo partnership:

• The agreement will last 10 years, but it can be prolonged.
• Microsoft will buy the Yahoo’s search technologies 10 year license.
• Bing will become the exclusive search technology for Yahoo websites.
• Both companies will keep current display advertising business, and sales force separately.
• Microsoft will pay TAC to Yahoo at a rate of 88% of the ad sales revenue during the first five years.
• Full implementation will occur within 24 months after the deal approval.

Well, the deal is now signed. Both parties will host a press conference at 5:30AM PDT today. A new website was launched: www.choicevalueinnovation.com and you can find all the details regarding the benefits of the agreement.

You can read the full press release here.