As we just reported in our last post, Bing has been doing everything it possibly can, to keep the fire burning against Big Search Daddy, Google. And the latest news is really a BIG blow. Yahoo! is in final stages to settle for a deal with Microsoft, to make Bing, its search provider. The deal would basically benefit the two parties through a revenue sharing model.

Yahoo! was in talks with Microsoft execs for the past couple of weeks regarding this search deal but the deal couldn’t be finalised because Yahoo! wanted some initial lumpsum money(hundreds of millions of dollars) to settle for the revenue sharing deal with Microsoft. Microsoft wasn’t really willing to pay any lumpsum amount and therefore the talks stretched too far.

If the rumors are to be believed, Yahoo-Microsoft talks may materialise by the end of this week which will help Bing grow from a search market share of 8.4% to somewhere around 29%. This would benefit Yahoo! from every end. It would get to save the search infrastructure and R&D costs it is bearing right now and would also help making more money with better search engine and ad click rates.

As the deal consolidates, Bing will find itself in much stronger position(29%) in front of Google(65%).