Breaking News: Yahoo to Carry Google Search Ads

Just breaking. Kevin Delaney is breaking a story about Google doing a deal with Yahoo.

Yahoo is in talks to carry search ads from Google, as part of a test that is designed to evaluate the revenue potential of a broader outsourcing arrangement.

As Yahoo fights for it’s life it is now going to bed with Google. In an attempt to fend of Microsoft Yahoo is going to use Google ads as a test to see if it can sustain itself.

This is the Silicon Valley Poison Pill in action.

The short-term test, involving a very limited percentage of Yahoo’s Web search queries, is designed for the two sides to evaluate the revenue potential of a broader search ad outsourcing arrangement. They have been discussing such an arrangement as part of Yahoo’s pursuit of alternatives to Microsoft Corp.’s unsolicited acquisition offer, according to people familiar with the matter.

Update: This is not getting steam in the blogosphere but it is clearly a test. No doubt it’s a scenario analysis to either block msft or run comparable numbers to justify a counter number that Yahoo may be looking for.

Love Rob Hof’s translation in his story on TechBeat (businessweek.com).  Rob has a great view with quotes from Yahoo and Microsoft.

And here’s Microsoft’s response, from general counsel Brad Smith:

Any definitive agreement between Yahoo! and Google would consolidate over 90% of the search advertising market in Google’s hands. This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo! We will assess closely all of our options. Our proposal remains the only alternative put forward that offers Yahoo! shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers.

Here is Businessweek’s Rob Hof translating Microsoft’s stance:  “In other words: You’re not fooling us, Yahoo. The deal stands, until you come to the table on our terms.”

Author: John

Entrepreneur living in Palo Alto California and the Founder of SiliconANGLE Media

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