Yahoo! and Google forge ad-sharing deal

Yahoo! has agreed a major deal to use Google’s advertising technology in a move that will further bolster Google’s dominance. The agreement also signals the end of Microsoft’s protracted merger talks with Yahoo!.

The tie-up will see Google ads appear alongside Yahoo! search results in the US and Canada. It is unclear at this stage how it will affect the UK market in the near future.

According to the latest Hitwise figures, Google accounted for 68.29% of all US searches in May, while Yahoo! recorded 19.95%. In the UK, Google search properties accounted for 87%, which was a 12% increase compared to May last year. Yahoo! accounted for 4%.

Yahoo! says the agreement with Google could be worth up to £410m in additional revenue every year and it is likely to commence in the next three and a half months. The deal will initially run for three years, with the option for Yahoo! to increase it to 10 years.

Eric Schmidt chairman and chief executive of Google says: “This commercial agreement provides Yahoo! with the opportunity to deliver more relevant ads to users and produce advertisers and publishers with better advertising technology to help them succeed in their own businesses.”

The news spells the end of merger talks between Microsoft and Yahoo!, with the former initially approaching the internet company with the view to acquiring it. Further discussions broke down between the two when Yahoo! declined Microsoft’s proposal to acquire the online search component of its business.

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