Video: Erick Talks Microsoft/Yahoo On Charlie Rose

TechCrunch co-editor Erick Schonfeld appeared on Charlie Rose last night to discuss the Microsoft/Yahoo search deal alongside Steven Levy of Wired and Nick Wingfield of The Wall Street Journal.

The group talked about the initial deal Microsoft offered Yahoo last year to buy Yahoo outright, the complicated nature of this new deal, Microsoft Bing, Yahoo walking away from the search fight rather than engaging, how this was the worst of the deals that Microsoft had offered so far, the Bartz/Ballmer reaction, what this means for Microsoft versus Google now, and the possible antitrust implications of all of this.

Watch the part of the show that featured the discussion below.

And here's the transcript:

CHARLIE ROSE: Microsoft and Yahoo! announced yesterday a partnership in the search and advertising business. Under the deal, Yahoo!`s websites will be powered by Microsoft new search engine, Bing. Yahoo! will get 88 percent of the ad revenue from searches on its sites for the first five years. With the partnership, the two hope to take on Google, which currently commands about 65 percent share of the U.S. market. The agreement follows Microsoft`s failed takeover bid for Yahoo! and shows the continuing importance it is placing on search.

Joining me now from Redmond, Washington, is Nick Wingfield of the "Wall Street Journal." Here in New York with me, Steven Levy of "Wired" magazine and Erick Schonfeld, co-editor of TechCrunch blog. I am pleased to have all of them here.

Nick, tell me how this deal happened, first.

NICK WINGFIELD: It started last year with the CEO of Microsoft, Steve Ballmer, making an unsolicited bid for close to $48 billion to acquire Yahoo!. Never happened, Yahoo! resisted the offer. It fell apart.

Fast forward to about January. Yahoo! has a new CEO, Carol Bartz, and Microsoft and Yahoo! start talking about a more limited deal, not a full-blown acquisition, in which Microsoft basically take over the search operations, handle the search operations on Yahoo! in exchange for some value. And the deal went through all sorts of fits and starts, and finally arrived at the deal you described a moment ago.

All of this being designed to improve Microsoft`s fairly poor position in search right now, which is a highly lucrative market, the online advertising market that accompanies search, and one that Microsoft really has not had much success in on its own.

CHARLIE ROSE: Is this a good deal for just Microsoft or good deal for Microsoft and Yahoo!?