Yahoo, Google expanding alliance?

Yahoo is likely to expand its Google AdSense project after initially positive results, say sources speaking to the Wall Street Journal. Both of the involved firms say that early results for the new search ad approach are positive and may result in more outsourcing in the future. Anti-monopoly regulations are a concern given the relative statuses of Google and Yahoo in the web market but might be avoided by limiting the partnerships to certain areas or search types, according to the paper's contacts.

The existing deal and an expansion are known to be efforts by Yahoo at creating a bargaining chip against a hostile takeover attempt from Microsoft, which wants to buy Yahoo as an attempt to thwart Google's control of online ads and search. Microsoft could likely force Yahoo out of any Google deals but may be forced to raise its $31 per share for Yahoo if a Google proves successful in at least the short term. Yahoo's latest results are due April 22nd and may serve as a reprieve from Microsoft pressure in at least the short term.

A deepened Google connection is also said to provide a stronger incentive for a proposed AOL merger. Better health at Yahoo would reportedly encourage Time Warner to spin off AOL and its high-traffic websites as the media giant would most likely hold a 20 percent stake in any resulting firm.

Filed under: industry
Other story tags: Google, Yahoo, AOL, Time Warner