U.S. and European regulators have cleared the long-discussed Internet search partnership between Microsoft Corp. and Yahoo Inc., enabling the rivals to form a tag team as they try to mount a more serious challenge to Google Inc.

The government approvals announced Thursday anointed an alliance that Microsoft and Yahoo proposed nearly seven months ago after years of flirtation and often contentious negotiations.

Microsoft first approached Yahoo about working together in late 2006 and again in 2007. In 2008, Microsoft launched a hostile bid to buy Yahoo in its entirety, only to withdraw the $47.5 billion offer in exasperation.

Yahoo now plans to rely on Microsoft’s search technology in an attempt to boost its sagging profits. Yahoo’s stock has been slumping since Microsoft took away its last offer of $33 per share in May 2008. The stock ended up 10 cents at $15.54 Thursday.

Microsoft is counting on the 10-year deal with Yahoo to provide more muscle as it tries to counter Google’s domination of the lucrative Internet search market. The companies make money by charging advertisers to pay to have their links appear when people search for certain terms.

While gaining access to Yahoo’s Internet search audience and advertisers is bound to help, it could still prove to be too little, too late.

The U.S. Department of Justice and European Commission had no problems with Microsoft and Yahoo working together largely because Google is so far ahead of them in the lucrative Internet search market.

Allowing Microsoft and Yahoo to join forces should spur “greater competitive pressures in the marketplace,” the Justice Department predicted in a statement.

Source: news.yahoo.com/technology

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