updated 07:40 pm EDT, Thu June 12, 2008
Yahoo goes Google Adsense
Building on its text-advertising dominance, Google on Thursday said that it has reached an agreement to allow Yahoo to serve Google's Adsense search and contextual advertising as well as allow enable users on Gchat and Yahoo! Messenger to communicate without between the networks. Under the predicted non-exclusive 10-year agreement, Yahoo! has the option to display Google ads alongside its own natural search results in the U.S. and Canada and Yahoo! can serve contextually targeted ads on its U.S. and Canadian web properties as well as on its current publisher partner sites. Yahoo, however, is free to enter into similar agreements with other advertising providers and use Google's advertising on as many or as few of its search results and content pages as it chooses.
Although Yahoo will continue to operate its own search engine, web properties and advertising services, the days of Yahoo Publisher Network's, a potential Adsense competitor, may be numbered. Of course, Google claims that publishers currently in the Yahoo! Publisher Network will benefit from Google's advertising technology, potentially increasing the revenue they earn from their sites, but Yahoo has already struggled with its Adsense competitor.
The previously successful Yahoo-Google ad test already triggered a DOJ investigation, and while they are not required to, both companies said voluntarily agreed to delay implementation for up to three and a half months to give the U.S. Department of Justice time to review the arrangement for any possible anti-competitive or antitrust issues; Google CEO Eric Schmidt has already been taking its case public. It was unclear whether the instant messaging interoperability would be delayed as well.
"We also think this is good for competition. The truth is, this kind of arrangement is commonplace in many industries, and it doesn't foreclose robust competition," Google wrote on its blog. "Toyota sells its hybrid technology to General Motors, even though they are the number one and number two car manufacturers globally. Canon provides laser printer engines for HP, despite also competing in the broader laser printer market. Google and Yahoo will continue to be vigorous competitors, and that competition will help fuel innovation that is good for users."
Yahoo! said it would maintain relationships with its own advertising customers and will continue to rely exclusively on its own advertising program outside of the U.S. and Canada.
On the heels of Yahoo's snub of Microsoft, the Google-Yahoo agreement certainly changes the dynamic of any potential relationship between Yahoo and Microsoft. Although Microsoft said it remains interested in an alternative deal, a 10-year Google-Yahoo agreement may deter the software giant -- the Yahoo-Google agreement has a term of up to ten years: a 4-year initial term and two 3-year renewals at Yahoo!'s option.
Financial terms between Google and Yahoo were not disclosed.