This document summarizes the proposed search partnership between Microsoft and Yahoo. It discusses the key details of the deal, including Microsoft acquiring an exclusive 10-year license to Yahoo's search technologies and the companies forming a joint sales force. Yahoo will maintain control over the user experience on its properties, while Microsoft will power the search technology and pay Yahoo the majority of search advertising revenue for the first five years. The document also outlines some benefits and risks for advertisers, and leaves room for questions.

1. YHOO-MSFT Search Deal SMX WestMarch 2010

2. Why MSFT-YHOO? It’s All About Share! Paid Click Share by Engine (Efficient Frontier Index) It takes >20% market share to establish relevancy to a large base of advertisers. 2

3. The YHOO-MSFT Dance Dec 2009 Definitive Agreement Signed 2H2010 Deal Implementation Jan 2009 Carol Bartz New CEO at Yahoo Feb 2008 MSFT Offers $31/Share 2008 2009 2010 Jul 2009 Letter of Intent for Search Partnership Feb 2010 US and EU Clearance Granted for Deal May 2008 MSFT Withdraws Offer 3

5. Yahoo! will become the exclusive worldwide sales force for both companies’ premium search advertisers. Self-serve advertising for both companies will be fulfilled by Microsoft’s AdCenter platform.

6. Yahoo! will innovate and “own” the user experience on Yahoo! properties, including the user experience for search, even though it will be powered by Microsoft technology

7. Microsoft will pay traffic acquisition costs (TAC) to Yahoo! at an initial rate of 88 percent of search revenue generated on Yahoo!’s O&O sites during the first five years of the agreement

8. Microsoft will guarantee Yahoo!’s O&O revenue per search (RPS) in each country for the first 18 months following initial implementation in that country4

9. Key Benefits Risk: Can Yahoo stay relevant in search? 5

10. Advertiser Benefits and Risks 6

11. CPC Variance Between MSFT & YHOO 7

12. Questions? Justin.Merickel@efrontier.com Follow Us: twitter.com/efrontier 8