Microsoft and Yahoo announced a partnership Wednesday in a bid to challenge Google's dominance in online search.

Searches performed at Yahoo.com will be powered by Microsoft's new Bing search engine. Yahoo, in turn, will be responsible for attracting advertisers.

Microsoft said that it will pay Yahoo 88% of the revenue it gains from searches on Yahoo's sites. The software giant will also have the rights to integrate Yahoo search technology into its own existing Web search platforms.

The revenue sharing agreement will increase Yahoos operating income by about $500 million annually, according to a press release.

The deal will allow Microsoft to "create more innovation in search, better value for advertisers and real consumer choice in a market currently dominated by a single company", so Chief Executive Steve Ballmer.

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