Yahoo gets in bed with Google to spite Microsoft

April 9, 2008

Yahoo gets in bed with Google to spite Microsoft Yahoo is a hot commodity lately, mostly due to Microsoft’s continued attempts to take it over. Partly to demonstrate the belief that it’s worth more than Microsoft has offered so far, Yahoo has decided to outsource a portion of its ad search space to Google.

The arrangement will last less than two weeks and will affect up to 3% of Yahoo’s search volume, according to The Wall Street Journal. “Yahoo views the latest test partly as a way to demonstrate its belief that it is worth more than Microsoft has offered.”

Though its unlikely to dissuade Microsoft from its pursuit of a takeover, the test may provide evidence to back up Yahoo’s position.

Yahoo says that “the testing does not necessarily mean that Yahoo will join the AdSense for Search program or that any further commercial relationship with Google will result.”

That could be a significant influx of cash, as Google’s system brings in a higher proportion of revenue per search query than Yahoo’s current system. The broader concern here is a virtual monopoly on web traffic, even beyond what Google already possesses.

If Google and Yahoo partnered on any significant level, they would virtually crowd out competitors.

“Prior to Microsoft’s offer for Yahoo, Yahoo already had been in negotiations to outsource its Web-search advertising in Europe to Google, say people familiar with the matter. Since last year, some investors have called for Yahoo to abandon its own search advertising system and use Google’s as a quick way to boost Yahoo’s revenue.”

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