A typical modern “open marriage.”
As the GoogleGazer predicted, Yahoo and Google today announced that they had entered into a non-exclusive agreement that gives Yahoo! the ability to use Google’s search and contextual advertising technology through its AdSense™ for Search and AdSense for Content advertising programs. Under the agreement, Yahoo! has the option to display Google ads alongside its own natural search results in the U.S. and Canada. In addition, Yahoo! can serve contextually targeted ads on its U.S. and Canadian web properties as well as on its current publisher partner sites. Yahoo will continue to operate its own search engine, web properties and advertising services.
In addition, Yahoo! and Google agreed to enable interoperability between their respective instant messaging services bringing easier and broader communication to users.
As we pointed out earlier, this agreement is pro-competition, because it is non-exclusive and encourages open standards. However, as we noted, Google’s huge inventory of ads makes it likely that it can win the lion’s share of bids, by offering the best paying ad for most searches.
In addition to its official press release, Google comments on the deal on its blog.
Google and Yahoo both win. The obvious loser; Microsoft. So why did Yahoo’s stock drop, and Microsoft’s rise? Because now that Yahoo is living with Google, it’s “used merchandise” and is likely to stay independent rather than attract a premium-paying suitor like Microsoft. And Microsoft’s shares rose, as it will not be shelling out all that cash and seeing its earnings dragged down by Yahoo, not to speak of all the management distraction that such a merger would entail.Google’s shares also rose. No surprise there. The deal is great news for Google shareholders.
The moral of the story? Go long GoogleGazer, your best predictor of what will happen to Google, its friends and its enemies.
Filed under: Google, Microsoft, Search, Yahoo Tagged: | Ad Sense, AdSense, Content Advertising, GoogleGazer, Microsoft, MSFT, Search, Yahoo, YHOO
