Yahoo announces Google ad partnership

Within hours of announcing the end of talks with Microsoft, Yahoo has revealed that it has entered a search advertising partnership with Google. The exact terms of the partnership are a little technical, so here’s the relevant bit straight from the official press release:

The agreement enables Yahoo! to run ads supplied by Google alongside Yahoo!’s search results and on some of its web properties in the United States and Canada. The agreement is non-exclusive, giving Yahoo! the ability to display paid search results from Google, other third parties, and Yahoo!’s own Panama marketplace.
Under the terms of the agreement, Yahoo! will select the search term queries for which – and the pages on which – Yahoo! may offer Google paid search results. Yahoo! will define its users’ experience and will determine the number and placement of the results provided by Google and the mix of paid results provided by Panama, Google or other providers. The agreement applies to paid search and content match and does not apply to algorithmic search. The agreement also applies to current partners in Yahoo’s publisher network.

The important part is that Yahoo believes the agreement will significantly improve its operating cash flow, while at the same time providing the freedom to develop its own search and advertising services. Also of interest to users is that, as part of the agreement, Yahoo and Google plan to make their instant messaging services (Yahoo Messenger and Google Talk) interoperable.

Yahoo says the deal doesn’t require regulatory approval, but the two companies have nonetheless agreed to hold things up for three months while the U.S. Department of Justice reviews the deal. Assuming everything goes well, the agreement will be valid for at least four years and as many as ten years, unless there’s a “change of control” of either company. In such an event, either party would be free to end the partnership.

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