The deal calls for Yahoo! to use Microsoft's Bing search engine on its sites. Yahoo! will handle ad sales for Bing, but won't receive any upfront payment from Microsoft.

Yahoo! expects to achieve considerable cost savings from pushing its search queries through Microsoft's servers.

Search expert Danny Sullivan said: "[Google] should be worried. It's going to give Microsoft in one fell swoop a much bigger share of the search market."

Get the full story at The Wall Street Journal (free content)