Microsoft's new Bing search engine will be the default provider to Yahoo! Search and Microsoft acquires a 10 years license to Yahoo's search technology.
Microsoft and Yahoo! just released simultaneous press releases here and here. The companies have also set up a joint informational website here.
The Microsoft Press Release has videos from both Steve Ballmer and Bartz with links to more.
The timing of the announcement was obviously set for the US stock market open as a conference call is set for 5:30 AM PT today.
You can follow Yahoo! (NASDAQ: YHOO) here and Microsoft (NASDAQ: MSFT) here.
Update: A complete transcript of this morning's conference call has been posted here.
Update 3: Yahoo has re-released their initial Press Release (adding the term 'Multimedia' and more) here.
Update 2 Wednesday, July 29 12 AM ET (Image from TwitScoop.com)