Yahoo! is now closer to outsourcing its search advertising to Google, after a first week trialling the system has delivered “positive results”, reports The Wall Street Journal, quoting people familiar with the matter.
The companies declined to comment. Yahoo! announced last week that it was launching a two-week trial of Google Ad Sense platform for 3% of its searches. The deal would enable Yahoo! to better defend itself from Microsoft’s hostile takeover bid, by increasing its cash flow by more than USD1bn, says Citigroup Global Markets analyst Mark Mahaney, quoted in the WSJ. This is because Google Ad Sense generates higher revenues per search than Yahoo!’s platform. The partnership would also strengthen Yahoo!’s position while it is in talks with Time Warner to merge with AOL.
However, analysts say a Google-Yahoo! deal could struggle to receive a green light from antitrust authorities, given the overlap between the two online giants. The two companies are reportedly figuring out possibilities to work around the problem, such as limiting the deal to discrete groups of searches or regions.