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LONDON (MarketWatch) — Microsoft (MSFT) and Yahoo (YHOO) struck a long-awaited deal on Internet search in which Microsoft will power Yahoo’s search tool while Yahoo will become the exclusive sales force for both firms’ premium search advertisers.

Terms are for 10 years, in which Microsoft will license Yahoo’s core search technologies, and Microsoft’s Bing will become the exclusive algorithmic search and paid search platform for Yahoo sites. Microsoft will pay traffic acquisition costs at an initial rate of 88% of search revenue generated on Yahoo sites for the first five years. Yahoo sees the deal lifting annual operating income by around $500 million and capital expenditure savings of $200 million. Yahoo sees an annual operating cash flow benefit of $275 million.