Yahoo and Microsoft announced Thursday that their search agreement has received clearance from both the U.S. Department of Justice as well as the European Commission.

The deal -- first announced in July of 2009 -- will involve Yahoo handing over its Web search activities to Microsoft in exchange for a portion of the ad revenue generated. In a joint statement, the two companies said they plan to complete the transitioning of search by the end of the year, though some advertising partners may not be moved until the following year.

Following tests with search users, advertisers, online publishers and distributors of search technology, the European Commission said market players "expect (the deal) to increase competition in Internet search and search advertising by allowing Microsoft to become a stronger competitor to Google."

Yahoo and Microsoft announced in December that they had finalized the details of an Internet search and advertising partnership -- a year after Microsoft offered $47.5 billion in a takeover bid for Yahoo.

Under the revenue-sharing agreement, Yahoo will use Microsoft's new Bing search engine on its own sites while Yahoo will provide the exclusive global sales force for premium search advertisers.

Analysts are divided on how much closer the tie-up will take either company to powerhouse Google, the overwhelming leader in a web search and advertising market which the research firm Forrester estimates will be worth more than $30 billion in 2014 in the United States alone.

AFP contributed to this report