Yahoo has signed a non-exclusive deal with its rival Google this morning, in which Google will supply Yahoo with search ads. The deal also extends beyond advertising, where the two giants will make the instant-messaging (IM) services interoperable, removing the barrier that separated two communities users. The deal has ended the previous talks between Yahoo and Microsoft without any results. The deal is believed could increase both Yahoo and Google search revenue and also could make Google even gaining more power in the market.
"We see this as a good, open, flexible deal and (one that) helps Yahoo be strengthened as a good longer-term competitor," Chief Executive Jerry Yang said.
Yahoo is expecting the deal could raise revenue by USD 800 milion during the first year and extra incremental operating cash flow at US$ 250 million to US$450 million.
"This agreement provides a source of funds to both deliver financial value to stockholders from search monetization and to invest in our broader strategy to transform display advertising and advance our starting-point objectives with users, It enhances competition by promoting our ability to compete in the marketplace where we are especially well-positioned: in the convergence of search and display." Yahoo President Sue Decker said in a statement.
It is said, the deal is a 10-year deal with a four-year initial period and two options for Yahoo to renew for three years.
"This commercial agreement provides Yahoo with the opportunity to deliver more relevant ads to users and provide advertisers and publishers with better advertising technology to help them succeed in their own businesses, and will preserve the competitive and dynamic online advertising space", said Google CEO Eric Schmidt.
Although the partnership signed, both companies are voluntarily delaying the implementation for up to three and a half months to let Department of Justine to review the deal after Microsoft raised antitrust concerns about the deal.
"This collaboration between two technology giants and direct competitors for Internet advertising and search services raises important competition concerns. The consequences for advertisers and consumers could be far-reaching and warrant careful review, and we plan to investigate the competitive and privacy implications of this deal further in the Antitrust Subcommittee.", said Senator. Herb Kohl, Democratic chairman of the Senate Antitrust Subcommittee.I believe Microsoft didn't push that 'I'm feeling lucky' button earlier.
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