Yahoo has get-out clause for Microsoft deal

Web giant can walk away.

Yahoo had an escape clause written in to its recently signed search and online advertising deal with Microsoft, according to new details that have emerged from a filing with the US Securities and Exchange Commission issued late yesterday.

The 8-K Form revealed that Yahoo can walk away from the deal if Yahoo's and Microsoft's average revenue per search query for a year falls below an agreed, but not disclosed, percentage, or a certain percentage of Google's share.

Yahoo is also able to exit the deal if the combined Microsoft/Yahoo market share falls below a specified percentage, according to the filing.

More details were also revealed about the financial terms of the deal. During the first five years, Yahoo will receive 88 percent of the net revenues from advertising placed on its pages. After five years, Yahoo will receive between 88 per cent and 93 percent depending on options given to the two companies.

"Microsoft will also pay Yahoo US$50m annually during the first three years of the search agreement," the filing stated. "Yahoo may use these payments to partially cover transition and implementation costs not otherwise covered under the search agreement."

Yahoo and Microsoft finally put pen to paper on the deal last week, but the two computing giants are not out of the woods yet, as anti-trust regulators are set to examine the terms closely.