Yahoo and Microsoft are set to announce their search partnership tomorrow, the US trade publication Advertising Age reports.
Under the deal, Microsoft's Bing will become the default search engine on Yahoo, with a combined share of the search market of just under 30%, compared with Google's 65%, the paper said.
The deal will come under antitrust scrutiny and may have to be restructured so it wins the approval of the Department of Justice.
Microsoft execs are concerned that Google has been lobbying against the partnership, and may seek the DoJ's blessing as Google tried to do with its proposed search agreement with Yahoo.
Under the terms of the partnership, Yahoo will get out of search technology and focus on marketing and sales. It is likely to lead the ad sales, the trade paper says, but says both sides will need to "unwind thousands of advertiser relationships and proprietary systems through which many large advertisers buy search ads."
Unlike that Google-Yahoo deal, the partnership appeared to have wide support from advertisers, the paper said.