[via BetaNews]

Microsoft and Yahoo announced on Wednesday a blockbuster interoperability deal that will reshape the landscape of the fragmented instant messaging market. The companies will connect their IM networks so users on each can communicate with one another using text and voice chat free of charge.

Starting in the second quarter of 2006, customers of both services will be able to see their friends’ online presence, share emoticons, and add new contacts from either Yahoo! Messenger or MSN Messenger to their buddy list.