Notwithstanding the falling apart of Yahoo!-Microsoft relationship, Yahoo!'s stock has recovered 4.5pc on the belief that it will outsource its search advertising to Google. The idea is, advertisers will have options either to select Yahoo!'s sponsored search results or Google or Yahoo!'s booking system. Jeffrey Lindsay, analyst at Sanford Bernstein has already predicted that on the back of this outsourcing deal Yahoo!'s stock price can touch $37. At present it is $25.47. It is believed that by outsourcing to Google, Yahoo! can double the size of its paid advertising biz.
This is what Page has to say about the development. (Source)
Google has "a large advertising share, but there are ways in which to structure a deal with Yahoo that would be reasonable, especially given the alternatives that they have…Yahoo wants to remain independent. They've said that and we would support that…We think it's better to…not have really strong concentrations" in the technology industry.
The NY Times writes
Under a proposed partnership, Google would let Yahoo use its more sophisticated ad technology to deliver ads next to some Yahoo search results. By some estimates this could bring Yahoo $1 billion a year in added cash. Link
Google co-founder and president of products Larry Page has discounted the idea that the deal would present any potential anti trust problems.
Article Contd after the jump...
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Google and Yahoo have been discussing and testing an advertising partnership. As part of this deal, Google would supply some text ads alongside Yahoo search results. The companies both seem satisfied with results from a two-week test. However, a partnership between the two companies has stalled due to antitrust concerns. Source
Paul McDougall writes in InformationWeek:
The numbers raise questions about whether Microsoft's failed attempt to acquire Yahoo for $33 per share would have been worth it. They also could explain why the company now says it's no longer interested in such an acquisition.
An interesting take on this from Saul Hansell published in The NY Times. The headline reads: Microsoft should know money can't bye love.
The rap on Microsoft is that it copies everyone else's good ideas. That may be too kind. I think it also copies a lot of proven bad ideas. To wit, Microsoft's latest move to offer shopping rebates to people who use its Internet search service.
You can see why Microsoft would want to do this: It has too much money and not enough customers, so why not pay people to use its services? Sometimes putting money into creating value for your customers is a great strategy. For an example, see Amazon's decision to subsidize free shipping rather than buy television ads.
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