Yahoo will be displaying Google search ads in a small number in its search engine queries, a move likely to be interpreted as the latest in a series of Yahoo maneuvers to resist Microsoft’s acquisition attempt.
The test, expected for two weeks and be limited to up to 3 percent of Yahoo search queries in the U.S., is specifically for Google’s AdSense for Search service. In other words, Yahoo would be acting as one of the Web publishers that carry pay-per-click text ads from Google. The ads will appear only in Yahoo.com.
The announcement was first reported Wednesday afternoon by The Wall Street Journal, quoting anonymous sources. A broader agreement to outsource its search ads to Google could let Yahoo increase its cash flow, because Google ads generate more revenue per search, the Journal reported, referring to a consensus belief among financial analysts and Yahoo investors.
Yahoo noted 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.” Yahoo will not comment on the nature or timing of any potential relationship with Google.
Microsoft, whose acquisition offer was rejected by Yahoo’s board in February, on Saturday said it will launch a proxy fight to attempt a hostile takeover if Yahoo doesn’t agree to the acquisition in the next three weeks.
On Wednesday, Microsoft blasted the Google-Yahoo announcement, saying that a broad outsourcing deal would inevitably run into regulatory trouble because it would give Google more than 90 percent of the search advertising market.
“This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo. We will assess closely all of our options,” said Brad Smith, Microsoft’s general counsel, in a statement.
“Is this real? Is Yahoo seriously considering replacing its search ad system with Google’s?” Weide said. “Or is Yahoo doing this merely to annoy Microsoft and drive Microsoft away from its acquisition attempt? It’s not clear.”
Should Yahoo enter into this deal with Google, it would be an acknowledgement that it has failed to attain its goals in search advertising, despite numerous efforts, including a significant upgrade of its system called Panama.