This means that sometime in the next two years and pending regulatory approval, Microsoft's Bing search technology and results will "power" Yahoo's web search results. Microsoft will have the right to use Yahoo search technology thats been developed to this point. Yahoo has the option to use (not in the works at this time) Microsoft's technology for their mobile products. So we don't really know what will happen to SearchMonkey, Search Pad, etc.
Update: According to SEL, (they spoke to Yahoo and Microsoft execs) the deal means that Yahoo will use Microsoft's technology to power web, image, and video search. There will be a single crawl/database.
Yahoo is giving up running their own algorithmic search engine to concentrate on other areas. It's a 10 year deal. Other than these important points, this deal has MAJOR implications for search engine advertising business. More search "implications" (the nuts and bolts for searchers) will come over time. More about that in the articles linked below.
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