Yahoo and Google Agree Ad Deal After Microsoft Flounce-Out

13 June 2008

SUNNYVALE, California: 'No way, no how, not even at the $33 a  share we offered last month,' was the message to Yahoo as Microsoft stalked away in a fit of pique from the love match it had pursued since February.

Disconsolate Yahoo is not - although the same may not be true of corporate raider Carl Icahn who acquired 10 million shares in the company in the hope of making a killing. 

Having spurned Microsoft, Yahoo has cosied-up with the Czar of Search, until a few weeks back its deadliest rival.

In an inked deal, Yahoo will run ads sold by Google - an arrangement the Yang Gang estimates will accrue $800 million in annual revenue via improved monetization of certain types of searches.

Yahoo will retain control as to how Google's ad are displayed alongside its own advertising. And both parties are examining a broadening of the relationship into areas such as display advertising.

Yahoo president Susan Decker hails the pact as "a bridge" that will help the company build a converged display and search business.

But the web titans' agreement will likely attract intense regulatory scrutiny and cannot be seen as a done deal until the light changes to green – by no means a certainty.

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