Yahoo to Test Google AdSense
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