Microsoft and Yahoo have sealed the deal

UPDATE: Microsoft and Yahoo issued joint statements this morning announcing their search partnership. As expected, Bing will power Yahoo's search and Yahoo will deal with sales, advertisement and "providing consumers with great experiences with the world's favorite online destinations and Web products."

Microsoft CEO Steve Ballmer said, "This agreement with Yahoo! will provide the scale we need to deliver even more rapid advances in relevancy and usefulness. Microsoft and Yahoo! know there's so much more that search could be. This agreement gives us the scale and resources to create the future of search."

The agreement will last 10 years and will go into full effect within two years, pending regulatory approval. It pertains only to PC-based search, and does not deal with Microsoft and Yahoo's email, IM, display advertising, or any other Web properties or products, and has no exclusivity clause for Yahoo's mobile search.

In terms of privacy, the agreement limits the amount of user data shared between the companies to the "minimum necessary to operate and improve the combined search platform."

Multiple reports around the blogosphere and mainstream press say the long-rumored search deal between Microsoft and Yahoo is all over but the inking, and will be formally announced within the next 24 hours.

Kara Swisher at All Things D has been leading coverage this evening, and reports the following:

• Bing will be the new default search engine on Yahoo.

• No money is changing hands up front; the focus of the arrangement will be revenue sharing, as previously reported by AdAge.

• Yahoo will sell search ads on but its site and Bing, but Microsoft's AdCenter tech will underpin it. (Where does this leave Panama, Yahoo's high-profile ads-platform rollout? Well...)

If the portion of the rumors concerning Bing are true, it marks the passing of the Web's first great mainstream search project. Begun in April 1994 as "Jerry and David's Guide to the World Wide Web" and hosted at akebono.stanford.edu, the site received one million hits by year's end and within a year had not only its own URL but its own magazine, Yahoo! Internet Life. Its original underpinning was a human-built taxonomy with humans working to sort submitted sites, which allowed for high-quality results but became increasingly difficult to sustain as the Web exploded.

A combined Bing-Yahoo search may give niche-dominant Google some pause, but the two together still represent under 30% of the market -- less than half Google's share.

Neither Microsoft nor Yahoo is talking to anybody yet; more news as we know it.