A deal has been struck between Microsoft and Yahoo for coordinating search efforts to increase market share and innovation. With Yahoo and Bing combining, they will now command 26% of US search volume. Google however controls 70% of US search volume.

Steve Ballmer, Microsoft’s Chief Executive, stated that investors still don’t understand the deal that will place Yahoo and Microsoft in a long term partnership for search innovation and growth.

Essentially the deal will use Yahoo’s search engine to help promote Microsoft’s new search engine, Bing. While doing so, Microsoft will operate the very costly infrastructure on which the search system will operate and assume the costs for such. Yahoo will be able to keep the majority of the profits produced by advertising on the Yahoo sites.

After announcing the deal, Yahoo shares plummeted about 15%.