Google and Yahoo announce ad-sharing deal

Two-week trial to unsettle Microsoft?

10 April 2008 8:12 GMT / By Amy-Mae Elliott

Yahoo and Google have announced a surprise deal that will see the two search engine giants sharing advertising space.

A 2-week "pilot" will see Google placing adverts along 3% of search results on Yahoo's US site.

Skeptics are suggesting the deal has been put in place in order to show Microsoft, currently in increasingly aggressive negotiations to buy Yahoo, that the web co has other options still to explore.

Yahoo currently has three weeks until Microsoft's current offer for the company runs out, when Microsoft's CEO Steve Ballmer has threatened to go above the board's head direct to the shareholders.

Google and Yahoo currently control more than 80% of the US search market, which means a longer term team-up would be almost impossible under anti-trust regulations.

"It doesn't make a lot of sense for Yahoo to make an announcement like this when everyone knows a long-term relationship (with Google) can't happen. It strikes me as somewhat desperate", Poor's equity analyst Scott Kessler said.

In the mean time, The Wall Street Journal has reported that Yahoo is close to unveiling a complex plan that would combine its site with Time Warner's AOL.