Yahoo And Google Make Ad Deal

Yahoo has agreed to let Google put search ads on its site. The deal still needs regulatory approval, but it means that any possible Microsoft deal is dead.

Reuters has reported that Yahoo has allowed Google to sell search ads on its site, meaning any possible deal with Microsoft is dead in the water.

In a non-exclusive process, the two will pit ads against each other in auctions, seeking the ad that pays highest. In theory, the non-exclusive process means others could join the bidding, and that also makes it easier for the deal to receive the necessary regulatory control from the Department of Justice, although it will be a few months before that’s known.

Of course, this ends any possible Microsoft bid. The announcement sent Yahoo shares falling by 10%, while Microsoft shares rose 4%.

Yahoo said the new agreement could bring in $800 million annually, with expectations of $250-450 million in the first year.
Carl Icahn, the investor who’s trying to oust the Yahoo board over its refusal to accept the Microsoft takeover offer, was no available for comment.

Eric Schmidt, Google’s chief executive, said:

"This commercial agreement provides Yahoo with the opportunity to deliver more relevant ads to users and provide advertisers and publishers with better advertising technology," and Yahoo’s chief executive added:

"We believe that the convergence of search and display is the next major development."

The partnership is initially set to last for three years, but if Yahoo renews it could last for up to a decade.

Since its takeover bid failed, Microsoft had reportedly offered to buy Yahoo’s search business as well as a 16% minority stake in the company, which Yahoo had refused.