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Yahoo! revenue highly reliant upon Microsoft paying it to use Bing

December 12, 2013

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One third of Yahoo! revenue comes from Microsoft

The U.S. Securities and Exchange Commission (SEC) has sent out letters to Yahoo! Inc. asking for clarifications on its revenue tied to search and display advertising, after the company released information outlining its operating agreement with Microsoft for its use of Bing as the default search mechanism across Yahoo.

Read also: How to use Yahoo! Marketing Dashboard for your business

Previously, Yahoo stated that the Microsoft deal comprised of over 10 percent of sales, now reporting that the partnership generated 31 percent of Yahoo’s revenue in last quarter. The alliance between the two companies was forged in 2009, and has since shared revenue from advertising with Yahoo.

Yahoo also now says it will break out quarterly sales for search and display based ads for its own properties and from all promotions tied to their partner sites, a direct result of the SEC inquiry.

According to the new SEC filing, SEC accounting branch chief, Patrick Gilmore wrote in a letter to Yahoo CEO Marissa Mayer in April, “Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.”

Yahoo’s revenue is now under the microscope not just from investors, but from interested consumers, as the company changes direction under their relatively new leader, Mayer. The company acquired Tumblr and promised not to screw it up, and it remains a tool in their arsenal that we have not yet seen come to fruition as a monetization tool for the brand.

Yahoo has forecast the fourth quarter sales as $1.18 billion to $1.22 billion (excluding all revenue shared with partner sites), falling far short of predictions that they would exceed $1.25 billion.

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

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