According to the internal memo obtained by Geekwire, Mehdi and his tenure are described as follows:

Yusuf has been involved with leading Microsoft Online Services businesses longer than anyone else on the OSD LT, and has been a pivotal leader at critical milestones of our division’s journey from the early days of MSN, to the original MSN and Live Search products, to the launch of Bing and the consummation of key strategic deals for OSD and MS, including Yahoo!, Facebook, Twitter and Nokia.  Most importantly, he has built a world class marketing, business development, strategy, and product management organization that has made incredible contributions to the success of OSD and Microsoft.  

Mehdi’s direct reports will now report directly to Qi Lu, (the former Yahoo executive) who is president of the Online Services Division. While Bing has continued to gain market share, OSD has continued to loose money and faces increasing pressure to “stop the bleeding.” The following chart shows the quarter over quarter loses since 2007.

Source: Microsoft/CNN Money

The study was made up of matching 6,000 Google employees and 16,000 Microsoft employees email addresses with grocery purchase behavior in partnership with a loyalty card aggregator. They determined a lot of interesting differences between Googlers and Microsoft employees.

• Googlers are more likely to buy bacon, ice cream, fresh fruits and vegetables, Mountain Dew and Doritos
• Microsoft employees are more likely to buy vitamins, butter, popcorn by Orville and Capri Sun drinks
• Googlers are more likely to be single and without children, while Microsoft employees are more likely to be married with kids.
• Microsoft employees are typically older than Googlers.

Here are some interesting charts from the report:

Google vs. Microsoft Study_Rapleaf –

Related Stories:

• If Future Employees Compromise Privacy, Don’t Expect Google To Tell The World
• On Google Growing Up, Losing Employees & Being The New “California”
• Google Fired Two Employees For Breaching Google User Privacy
• Bing’s Chief Scientist, Alek Kołcz, Joins Twitter
• Top Microsoft Execs Get A Pay Cut
• Report: Microsoft To Lay Off 15,000 Workers

The Twitter employee page has Alek’s Twitter avatar and @zorbageek linked to at the bottom. There has not been any official confirmation or announcement from Twitter or Bing outside of this employee page update.

ReadWrite/Web said:

Kołcz is an info-science heavy, having published numerous research articles in publications like The Journal of Supercomputing, Neurocomputing and Neural Networks. He appears to have a special affinity for spam crushing, something Twitter must struggle with a whole lot. As use of the service grows, so too will the importance of its search – especially given the very public nature of Twitter’s data.

Related Stories:

• Up Close With Bing’s Twitter Search Engine
• Bing Testing Twitter In Search Results
• Bing Adds Twitter Smart Answers
• Bing Social Search Now Recommends People To Follow On Twitter
• Bing & Twitter Mesh With BingTweets

Ballmer in the interview said, “They’re [Google] starting to look at the stuff we’re doing and copying it back. What is it? Imitation is the sincerest form of flattery.” He outright says Google is copying them. Of course, many would agree.

I also found Ballmer’s comments on what Bing does better than Google. Ballmer said, “our maps are better, our images our better, our picture is different.”

In response to Google’s CEO calling Bing, Google’s biggest competitor, Ballmer said, “We’re his best competitor, and we’re a very good competitor and we’re going to do a very good job..”

Outside of those comments, did you know Ballmer checks his Facebook account and page everyday?

Now, Ballmer is putting his thoughts in writing … well, electronic writing … via a post on Microsoft’s new blog. Says Ballmer:

Engagement in China and around the world is very important to us, in part because we believe it accelerates access to 21st century technology and services and helps provide the widest possible range of ideas and information. We have done business in China for more than 20 years and we intend to stay engaged, which means our business must respect the laws of China. That’s true for every company doing business in countries around the world: we are all subject to local laws.

At the same time, Microsoft is opposed to restrictions on peaceful political expression, and we have conversations with governments to make our views known. In every country in which we operate, including China, Microsoft requires proper legal authority before we remove any Internet content; and if we remove content, we give users notice.

The statement is similar to what both Ballmer and Gates said last week. Perhaps the most noteworthy thing here is that Ballmer, much like Gates, has started blogging. And both in the same month. The Microsoft Blog launched about three weeks ago; Ballmer has written two of its posts.

• CEO Steve Ballmer $1.265 million vs. $1.34 million a year ago
• CFO Chris Liddell: $3.5 million vs. $4.8 million
• COO Kevin Turner: $5.4 million vs. $8.6 million
• Entertainment and Devices President Robbie Bach: $6.2 million vs. $8.3 million

The snark impulse is pretty strong and I’m trying not to write something very sarcastic about struggling to get by on $3.5 million — but I won’t.

This is appropriate action for the company at a time of underperformance. If you really want to dig into these salary figures you can read the SEC filing (page 16).

Microsoft has quietly pulled his bio page but Google still has a cached version.

“Search is all about predictions, highly educated guesses about what people really mean when they type in a word like Diesel or a phrase like ‘red, white and blue’,” said Mark Carges, eBay’s CTO and SVP of Marketplaces Product. “Eric’s expertise in natural language processing and data mining is a huge asset as we continue to improve our ability to determine customer intent and get the right products in front of the right buyer at exactly the right moment.”

Gulli said he will be “leading all the engineering development for UX and verticals in Europe,” focusing on Microsoft Bing’s search technology and user interface. He will be working at Microsoft’s London site of STC Europe nearby Carnaby Street.

What I found most interesting about his announcement post was that he, in not so many words, explained that he now has the resources needed to make a difference in search. The way I read it was that he felt that at Ask.com, he didn’t have enough resources to accomplish his goals. Gulli said that at Microsoft “you get the resources to experiment with it.”"Search is all about continuous improvements and evolutions, isn’t it?” Gulli added.

Congrats on the new job Antonio, it seems like you will be happy at Microsoft.

One of the striking things about the article is the uniform praise Lu receives from former Yahoo colleages and Google’s Udi Manber: “He is probably the best competition I can have.” The other is Lu’s devotion to his work:

He sleeps three to four hours a night. One most weekdays, he wakes up around 4 a.m., goes through his e-mail and runs four miles on a treadmill while listening to classical music or watching the news.

He prefers to be in his office between 5 and 6 a.m. to have uninterrupted time to prepare for his day. He is often sending e-mail to his staff until midnight or later. (Mr. Lu, who is married and has two daughters, reserves much of the weekend to spend with his family.)

(As a personal, editorial aside I would submit that while Mr. Lu is to be admired for his loyalty and devotion to his work, I hope Microsoft isn’t setting his work habits up as a model for others to emulate.)

Reportedly Lu sees his work at Microsoft as an opportunity to continue a mission in search he began at Yahoo. While the cultures of Yahoo and Microsoft are different, perhaps the most important difference at Microsoft is that Lu and his team have far more resources to bring to bear on search than he did previously.

The division Lu heads up, which houses search and online advertising, is a strategic but money losing business unit for Microsoft. No doubt Lu is under some pressure to improve the performance of that group and would ultimately be held accountable if it does not.

For its part, Bing is off to a solid start. That fact and the Yahoo deal offers Microsoft the best chance it’s had in years to make a competitive run at Google.

I blogged the keynote interview with Lu from SMX Advanced in June of this year.

Here are some verbatim excerpts from the SEC filing:

Negotiation and Execution of the Definitive Agreements

Pursuant to the terms of the Letter Agreement, the parties will negotiate and execute the Definitive Agreements as soon as practicable but in any event by October 27, 2009 (the “Negotiation Period”). If the Definitive Agreements are not executed during the Negotiation Period, the parties will submit any disputes regarding the final terms of the Definitive Agreements to an arbitration panel.

Conditions to Commencement and Termination Prior to Commencement

Prior to the Commencement Date, the Letter Agreement and Definitive Agreements may be terminated only by (a) mutual consent, (b) if a breach renders a condition incapable of being satisfied by the Termination Date (as defined below), or (c) if the conditions to commencement have not been satisfied by July 29, 2010 (the “Termination Date”); provided that Yahoo!, in its sole discretion, has the right to extend the Termination Date by six (6) months if the required antitrust approvals have not yet been obtained.

Search and Advertising Services and Sales Agreement

For a period of ten (10) years beginning on the Commencement Date (the “Term”), Microsoft will be Yahoo!’s exclusive technology provider for algorithmic and paid search services and Microsoft will provide contextual advertising to Yahoo! on a non-exclusive basis. Yahoo! will be the exclusive worldwide relationship sales force for Yahoo!’s and Microsoft’s premium search advertisers.

The services provided by Microsoft under the Search Agreement will be provided on all web sites, applications and other online digital properties owned or operated by or on behalf of (a) Yahoo!, Yahoo! subsidiaries and Yahoo! joint venture relationships, as well as on software applications developed or distributed by Yahoo! or Yahoo! subsidiaries that provide access to or enable algorithmic search services or paid search services (“Yahoo! Properties”) and (b) Yahoo! Syndication Partners (as defined below), as well as software applications developed or distributed by Yahoo!’s Syndication Partners that provide access to or enable algorithmic search services or paid search services from Yahoo! (“Syndication Properties”). “Syndication Partner” means a third party with whom Yahoo! has contracted to provide algorithmic search services or paid search services.

Subject to certain specified restrictions, Yahoo! will have full flexibility with respect to the user experience, content and look and feel on all of its web pages, and will also be entitled to use the paid search services and algorithmic search services for non-internet search queries with minimal restriction . . .

Microsoft’s mapping services and mobile search services. Yahoo! may implement each of the mapping services and the mobile search services on a non-exclusive or an exclusive basis. Yahoo! also has the option to work with Microsoft to implement the services on other platforms. If Yahoo! elects to receive services for other platforms, it must receive such services on an exclusive basis.

Revenue Share Payments and Other Payments

During the first five years of the Term, Yahoo! will be entitled to receive 88% of the net revenues generated from Microsoft’s services on Yahoo! Properties (the “Revenue Share Rate”). Yahoo! will also be entitled to receive its share (at the Revenue Share Rate) of the net revenues generated on Syndication Properties after the Syndication Partner’s share of net revenues is deducted. For new Syndication Properties during the Term, and for all Syndication Properties after the first five years of the Term, Yahoo! will receive its share (at the Revenue Share Rate) of the net revenues generated from Microsoft’s services on Syndication Properties after the Syndication Partner’s share of net revenues and certain Microsoft costs are deducted.

On the fifth anniversary of the Commencement Date, Microsoft will have the option to terminate Yahoo!’s sales exclusivity for premium search advertisers. If Microsoft exercises its option, the Revenue Share Rate will increase to 93% for the remainder of the Term, unless Yahoo! exercises its option to retain its sales exclusivity, in which case the Revenue Share Rate would be reduced to 83% for the remainder of the Term. If Microsoft does not exercise such option, the Revenue Share Rate will be 90% for the remainder of the Term.

Microsoft will also pay Yahoo! a payment of $50 million annually during the first three (3) years of the Search Agreement. Yahoo! may use these payments to partially cover transition and implementation costs not otherwise covered under the Search Agreement.

Termination Provisions

Yahoo! may terminate the Search Agreement if the trailing 12-month average of the RPS in the United States (the “U.S. RPS”) of Yahoo! and Microsoft’s combined queries falls below a specified percentage of Google Inc.’s (“Google”) estimated RPS measured on a comparable basis or if the combined Yahoo! and Microsoft query market share in the United States falls below a specified percentage; (d) on the fifth anniversary of the Search Agreement, and any time thereafter, Yahoo! has the right to terminate the Search Agreement if the trailing 12-month average of Yahoo!’s U.S. RPS is less than a specified percentage of Google’s estimated RPS; or (e) subject to exceptions, either party may terminate if a law, regulation or order would have a significant, adverse impact on a primary aspect of such party’s intended benefit of the Search Agreement.

Transition and Implementation Plan

Microsoft will hire not less than 400 Yahoo! employees (the “Transferred Employees”) and will offer the Transferred Employees market competitive compensation packages. In addition, Yahoo! and Microsoft will mutually agree on a retention plan to be paid for by Microsoft to assist in retaining the Transferred Employees and an additional 150 Yahoo! employees to be mutually agreed upon between Microsoft and Yahoo! to assist with providing the transition services.

The deal seems broader than the “web, image and video” search scope we heard before. Yahoo can terminate the deal if certain targets aren’t meet surrounding revenue per search, benchmarked to Google. At the five year mark the parties can change who runs “premium sales.” The rev share percentages change accordingly.

On a related note, there’s an opinion piece in the Wall Street Journal that argues these terms give Redmond a bigger win than Yahoo in Microsoft CEO Steve Ballmer’s “win-win” scenario but that, in the larger scheme of things, Google may have already won the game:

The deal is a clear win for Microsoft and a qualified win for Yahoo. The big question is whether it makes any difference in the only contest that really matters, which is the one with Google. The risk for both Microsoft and Yahoo is that the contest is already over. Second place won’t really matter, especially as the competition shifts to Microsoft’s home turf: operating systems.

Related coverage:

• It’s Finally Official, Microsoft & Yahoo Make A Deal, Yahoo Gives Up On Search
• Live Blogging The MSFT – YHOO Search Press Conference
• Microsoft-Yahoo Deals 2008 & 2009, Side-By-Side
• A Search Eulogy For Yahoo
• Micro-Hoo Details: Q&A With Mehdi & Schneider
• The Microsoft-Yahoo Search Deal, In Simple Terms