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Yahoo to Challenge Bing Despite MSFT Deal

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SUNNYVALE, California (Reuters) – Yahoo Inc said on Monday it has revamped its search to compete against Microsoft Corp’s Bing, even as it relies on the Redmond giant to power its queries.

The announcement of plans to put a new face on Yahoo Messenger and Mail and add functions to its search engine came after news that Google and Yahoo each lost a fraction of a point of U.S. search share to Microsoft last month.

“We are not a version of Bing,” Prabhakar Raghavan, a senior vice president of Yahoo, said to reporters at the company’s headquarters.

“We are Yahoo and that will continue…We collaborate on the back-end but we are competitors on the front-end,” he said,

At a press event held at their headquarters, the company gave more details of its complex relationship with Microsoft.

At the end of July, Microsoft and Yahoo signed a 10-year deal under which search on Yahoo’s websites will be generated by Microsoft’s new Bing search engine. The companies hope the deal will take effect early next year.

Microsoft will license Yahoo’s search technology, allowing it to integrate certain aspects of it into Bing. Microsoft’s advertising search product, AdCenter, will also replace Yahoo’s equivalent product, Panama.

Raghavan said that when Microsoft sends ads along with its answers to queries, Yahoo may or may not use all of them, depending on a complex formula.

A new series of boxes to the left of search results and ads will give users more ways to make use of what they have found, said Larry Cornett, Yahoo vice president of search products.

A box powered by Internet security company McAfee Inc, will filter dangerous links. Videos will play without leaving the search page.

A box to sites like Yelp, which provides user feedback on stores and restaurants, can be clicked to check out the quality of a sushi restaurant without leaving the search page.

Cornett, who demonstrated the new approach, said it was undergoing testing and will be available some time this year.

Comscore reported Microsoft gained 0.5 percent in July, but still only holds 8.9 percent of the search market, compared to 64.7 percent for Google and 19.3 percent for Yahoo.

Copyright 2009 Reuters. Click for restrictions.

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