In an SEC filing, it was disclosed that Microsoft has extended its 10-year search ad deal with Yahoo! for another 12 months.

The search ad deal, which originated in 2009, was renewed in 2011 before expiring last March 31, but has since been renewed again by Microsoft as of April 1st.  The deal allows Microsoft to provide search and advertising capabilities to Yahoo.

According to sources, Yahoo is trying to get out of the search-ad deal with Microsoft because its deemed it to be unprofitable.  Ever since CEO Marissa Mayer joined Yahoo, she has been looking for ways to sever the company’s ties with Microsoft, and has been looking for other alternatives – rumour has it that search giant Google may be it’s next partner.

But why is Yahoo looking to get out of the Microsoft partnership?

The Microsoft deal entitles the software giant to 12 percent of the revenue Yahoo earns from search ads, which works out around $12 million to $15 million per quarter.  Microsoft knew from the start that the search ad system will encounter some difficulties, so it offered Yahoo a certain level of revenue for every search query performed on Yahoo’s sites. This guarantee expired at the end of March, but was quickly renewed by Microsoft for another 12 months.

The Microsoft deal doesn’t seem bad, but if you think about it, Yahoo was a search engine before, so it’s quite ironic that they had to strike a deal with another company to provide search capabilities for them in the form of Bing.  Google knew that search was important from the get go, and even though it’s long since extended its efforts outside of search, it’s never forgotten where it came from.  Microsoft also knew how important search was, and now they’re making money out of it too, albeit not nearly as much as Google does.

Yahoo has declined to comment on the issue regarding severing ties with Microsoft, but a spokeswoman for Yahoo stated that, “Microsoft is an important partner, and we continue to work together to grow search share and improve monetization.”  Microsoft shared the same sentiments.

Yahoo is unlikely to get out of this 10 year-deal until at least the half-way point, which doesn’t come around until 2015.  By that time, Microsoft will have earned millions from Yahoo, and Google’s offer may no longer be on the table.