Embattled Sunnyvale, California-based Internet pioneer Yahoo, two months into a standoff with Microsoft for  control of the Web media firm, announced Wednesday that it will begin limited testing of Internet giant Google's search advertising system, as part of new efforts to show its stockholders the firm is worth more than the $42.4 billion Microsoft bid. The test of Google's AdSense system will last up to two weeks and display Google-managed advertisements alongside Yahoo search results for United States visitors to the firm's primary yahoo.com Web site, Yahoo said in a Wednesday statement which drew a swift response from Microsoft noting possible anti-trust concerns if the firms expand the partnership. Microsoft Raises Anti-Trust Concerns The Yahoo test participation in Google's advertising program, which is expected to apply to less than 3 percent of Yahoo searches, will not affect customers outside of the U.S. or any of the firm's affiliate or publishing partners, Yahoo said in the Wednesday statement. Yahoo earns some 60 to 70 percent less for each advertisement consumers click than rival Google, according to Yahoo's strategic forecast outlined during March 2008, despite gains made through implementation of the firm's Panama advertising system and the promise of its forthcoming AMP system, which may make an infusion of revenue from using the Google AdSense program attractive to Yahoo in the short term. By pursuing an expanded advertising partnership with Google, Yahoo is likely to draw intense anti-trust scrutiny from regulators who could scuttle such plans. News Corporation Among Firms Entering Talks By exploring partnerships such as the test with Google and merger talks with Time Warner's AOL division and Rupert Murdoch's News Corporation, moves the firm has called  "potential commercial business arrangements," Yahoo's board of directors has sought to fend off Microsoft's takeover bid. Despite Yahoo's admonition that its test with Google "does not necessarily mean that Yahoo will join the AdSense for Search program or that any further commercial relationship with Google will result," Microsoft was quick to issue a statement saying the test could lead to an agreement beyond a test and which could hinder competition. "Any definitive agreement between Yahoo and Google would consolidate over 90 percent of the search advertising market in Google’s hands," noted Microsoft general counsel Brad Smith in the statement. "This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo," Smith added. Yahoo CEO Yang Met With Google Microsoft maintained that its offer remained the best option for Yahoo shareholders. "Our proposal remains  the only alternative put forward that offers Yahoo shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers," Smith noted. Yahoo did not release further details of its test with Google, and noted that it would not comment on the timing of any potential agreement with the Mountain View, California-based search firm. Some industry analysts see Yahoo's trial run using Google AdSense advertisements as a demonstration of how it could bring in more revenue by abandoning its own search advertising system and replacing it with Google's industry-leading plan, to either force Microsoft to end its takeover attempt or raise its bid price. Within the past two weeks Yahoo chief executive Jerry Yang and company president Susan Decker have met with Google executives, according to a recent New York Times report citing a person familiar with the visit. Yahoo Testing Google Web Search Advertising Yahoo is working to close a deal that would join it with Google and AOL's non-Internet service property, according to speculation in a recent Reuters report citing a source familiar with the talks. Such a three-way alliance would see Yahoo receiving cash from Time Warner, which would receive a 20 percent interest in the entity formed by combining Yahoo and AOL, while AOL itself would be valued at some $10 billion in the deal, according to the Reuters report. Yahoo would buy back more than $2 billion of Yahoo stock at a price between $30 and $40 a share using cash from the deal, according to a Wall Street Journal report. Meanwhile Microsoft, which noted in its Wednesday statement that it will continue to "assess closely all of our options," was reported to be in talks with News Corporation to form an Internet titan combining three of the Web's largest publishers, consisting of Microsoft's MSN, Yahoo and News Corporation's leading social networking Web site MySpace, according to a recent New York Times report. Related Links:
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10:28 pm on April 10, 2008 (utc 0)