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Yahoo to Test Google AdSense

Perhaps Yahoo Inc. (Nasdaq: YHOO) and Google (Nasdaq: GOOG) will partner up after all. Yahoo has announced that it will carry search ads from its rival for a two-week trial period.

The move is “part of a test that is designed to evaluate the revenue potential of a broader outsourcing arrangement,” according to reports the Wall Street Journal published just before the official announcement broke late today. The initial partnership would be limited to no more than 3 percent of Yahoo’s U.S. traffic.

This kind of partnership got discussed when Microsoft Corp. (Nasdaq: MSFT) first announced its hostile takeover bid for Yahoo. (See Microsoft Makes $44.6B Hostile Bid for Yahoo.) At the time, the idea was seen as more of an attempt by Yahoo and Google to thwart Microsoft’s offer.

With Microsoft threatening to lower its acquisition price, it's still possible that this is just another effort by Yahoo to show that it has alternatives to Microsoft and ways to boost cash flow.

Any Yahoo/Google partnership beyond the proposed two-week test would certainly face intense anti-trust scrutiny by the U.S. government due to the two companies’ large share of the online search market. Microsoft pointed out as much in a statement published about 40 minutes after the companies' press release came out.

Yahoo, still saying Microsoft's $44.6 billion offer undervalues the company, has considered alternatives including alliances with Google, News Corp. (NYSE: NWS), or Time Warner Inc. (NYSE: TWX). (See Yahoo Rejects MSFT, Yahoo Answers Microsoft, and What Will Become of Yahoo?)

Yahoo shares were holding flat, at $27.77, in early after-hours trading.

— Raymond McConville, Reporter, Light Reading

Pete Baldwin 12/5/2012 | 3:43:46 PM
re: Yahoo to Test Google AdSense Well, now the WSJ is saying:

1. Yahoo talks with AOL are heating up

2. Microsoft is talking to News Corp. about a joint deal to take Yahoo. Remember Yahoo was theorized to be talking to News Corp. itself...

Anyone else ever play the board game Diplomacy? It goes a lot like this.
materialgirl 12/5/2012 | 3:43:45 PM
re: Yahoo to Test Google AdSense It all goes to show the power the Intenet in general, and GOOG in particular, is having on media in general. GOOG is going to own the search market eventually, because it is competitive and GOOG is better. YHOO's vain attempt to compete will ultimately fail due to poor economics. This just makes it faster.
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