Yahoo!, Microsoft Now Have Some Bing in Common

Updated from 8:08 a.m. EDT

SUNNYVALE, Calif. (TheStreet) --Yahoo!(YHOO Quote) and Microsoft(MSFT Quote) confirmed Wednesday they have sealed an Internet-search partnership under a 10-year agreement.

Yahoo! will use Microsoft's Bing search-engine technology on its own sites under the pact.

Microsoft CEO Steve Ballmer, in a statement Wednesday, said the agreement will provide Bing the "scale necessary to more effectively compete, attracting more users and advertisers, which in turn will lead to more relevant ads and search results."

"This agreement comes with boatloads of value for Yahoo!, our users, and the industry, and I believe it establishes the foundation for a new era of Internet innovation and development," said Yahoo! CEO Carol Bartz.

It was reported earlier by The Wall Street Journal and Reuters that a deal could be reached Wednesday.

A deal between the two companies narrows the Internet search gap with Google(GOOG Quote), the Journal notes. Microsoft and Yahoo! combined accounted for less than half of Google's 65% share of Internet searches in the U.S. market in June, according to ComScore.

Microsoft tried to acquire Yahoo! in 2008 but its $47.5 billion bid was turned down.

Yahoo! shares were falling nearly 8% to $15.88 in Wednesday morning trading.

--Reported by Joseph Woelfel in New York.