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Yahoo Plays Google Card; Microsoft Thunders ‘Unfair’

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Yahoo Plays Google Card; Microsoft Thunders ‘Unfair’

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Yahoo says it’s going to try offloading some ad placement to Google, experimenting with using Google’s AdSense for Search service to deliver relevant Google ads alongside Yahoo’s search results.

Yahoo made the announcement after the stock market closed. It didn’t take long for Microsoft’s chief counsel Brad Smith to lob antitrust claims at the unholy alliance.

Yahoo and Google trotted out such a scheme as a possible hidey hole for Yahoo to crawl into to avoid takeover by Microsoft after Microsoft went public with its offer two months ago.

Microsoft branded it anti-competitive then and has now repeated the charge.

In a statement Smith said, “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.”

He then said, “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.”

Over the weekend Microsoft delivered an ultimatum to Yahoo giving it three weeks to come to terms or suffer a proxy fight for control of its board. Microsoft also threatened to lower its bid. Yahoo’s retort was to ask for more money.

Yahoo says the test will apply only to traffic from yahoo.com in the US, last up to two weeks and be limited to no more than 3% of Yahoo search queries.

The original negotiations between Google and Yahoo, which pre-date Microsoft’s bid, were about outsourcing search advertising in Europe to Google. It’s been estimated that Yahoo could increase its cash flow 25% by outsourcing all its search ads to Google.

Yahoo says it’s exploring strategic alternatives to maximize shareholder value and that “the testing does not necessarily mean that Yahoo will join the AdSense for Search program or that any further commercial relationship with Google will result.”

It also said it “would not comment on the nature or timing of any potential relationship.”

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