Yahoo to Announce Partnership With Google And AOL
Yahoo and AOL are close on finalizing a deal that would combine parts of both companies. The deal would bridge Timer Warner's Internet operations with Yahoo by folding the AOL unit into Yahoo. In return, Time Warner would make a cash investment of about 20% of the combined entity, valuing AOL at about $10 billion.
The possible Yahoo-AOL tie-up is part of a threefold plan by Yahoo to present shareholders with an alternative to Microsoft's unsolicited offer. Yahoo would also propose repurchasing billions of dollars of its own shares and is negotiating with Google Inc. about an advertising tie-up. On Wednesday, Yahoo announced a short-term test under which it will carry search advertising from Google.
Yahoo also said it would begin a limited test of Google’s search advertising technology as part of efforts to remain independent from Microsoft. The test is designed to show whether or not the company could extract more revenue if it outsourced its search advertising system to Google, a person briefed on the plan said.
The test will involve using Google’s search advertising system, called AdSense for Search, to deliver ads that appear alongside Yahoo’s search results. The test will involve searches conducted in the United States on Yahoo.com, not on any of the company’s search affiliates, and will be limited to no more than 3 percent of all search queries, Yahoo said in a press release.
Microsoft General Counsel Brad Smith just put out a statement suggesting that any partnership would likely be opposed on regulatory grounds, as Google would get more than 90 percent of the ad search market:
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.
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