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Google and Yahoo to share web ads | Google and Yahoo to share web ads |
(about 8 hours later) | |
Yahoo and Google, the world's two biggest search engines, have announced a two-week experiment that will see them share advertising space. | |
During the pilot, Google will be able to place ads alongside 3% of search results on Yahoo's website. | During the pilot, Google will be able to place ads alongside 3% of search results on Yahoo's website. |
Analysts say the move is designed to frustrate Microsoft, which has offered to buy Yahoo for $44.6bn (£22.6bn), or extract a higher offer. | Analysts say the move is designed to frustrate Microsoft, which has offered to buy Yahoo for $44.6bn (£22.6bn), or extract a higher offer. |
The news came as both sides were reported to be forging other alliances. | |
Joint offer | |
Microsoft and News Corp are discussing making a joint bid for Yahoo, according to the New York Times. | |
The idea would be to combine three of the world's most visited websites: MySpace, Yahoo and MSN.com. | |
News Corp had previously discussed working with Yahoo to see off Microsoft's offer. | |
At the same time, Yahoo is looking to Time Warner's AOL to keep out of Microsoft's hands, according to the Wall Street Journal. | |
It reported that the deal would involve Time Warner making a cash investment for 20% of the merged firm, which Yahoo could then use to buy back shares. | |
'Less competitive' | |
Microsoft criticised Yahoo's advertising trial with Google, saying any lasting deal would not be in the consumers' interests. | |
"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," Brad Smith, Microsoft's General Counsel 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," Brad Smith, Microsoft's General Counsel said. |
But Yahoo said the testing did not necessarily mean that "any further commercial relationship with Google will result". | But Yahoo said the testing did not necessarily mean that "any further commercial relationship with Google will result". |
Investors reacted positively to the announcement, with Yahoo shares rising 7%. | |
"Yahoo has made a really clever move here," Cowen and Co analyst Jim Friedland said. | "Yahoo has made a really clever move here," Cowen and Co analyst Jim Friedland said. |
"It looked like Microsoft had all the cards, Yahoo is at least now able to use this for leverage to get Microsoft to pay more," he said. | "It looked like Microsoft had all the cards, Yahoo is at least now able to use this for leverage to get Microsoft to pay more," he said. |
Microsoft chief executive Steve Ballmer on Saturday gave Yahoo three weeks to agree to the company's offer or risk having the offer lowered. | Microsoft chief executive Steve Ballmer on Saturday gave Yahoo three weeks to agree to the company's offer or risk having the offer lowered. |