Yahoo Continues Flirtation with Google While Ogling AOL

05 November 2008

SUNNYVALE, California: Quite the Jezebel, Yahoo! Reported in these columns on Monday as having entered into due diligence investigations with AOLTime Warner, it transpires that the Sunnyvale siren is also continuing to make eyes at Google.

In what now appears to be a shrewdly conceived strategy, observers believe the Yang Gang hopes to extend their online reach via an AOL deal while pumping ad iron with Google. Some onlookers suspect the influence of wily investor Carl Icahn.

Meantime, Yahoo and Google, having encountered opposition to their proposed alliance from the US Department of Justice (to say nothing of the Association of National Advertisers) has now submitted a new game plan to the DoJ.

Under Plan A, filed in June, the deal permitted Yahoo to display search ads sold by Google and share the revenue. Yahoo was also able to select how many Google-sold search ads it could show and for which search terms. There was no revenue cap.

According to insiders, Plan B caps the revenues Yahoo receives from Google at 25% of its total search income. It also shorten the length of their agreement from a maximum of ten years to just two. And it permits Google advertisers to opt out of having their ads displayed on Yahoo sites.

Google's only acknowledgement of Plan B is that that it continues to "have cooperative discussions with the Department of Justice about this arrangement."

Data sourced from Wall Street Journal Online; additional content by WARC staff