It has been almost a week and a half since Yahoo! had announced its intentions to test Google advertisements in Yahoo! SERPs (Search engine Result Page). Now according to Wall Street Journal  the tests have been declared successful and a possible Yahoo! Google partnership talks have begun.

This partnership would definitely let Yahoo! breathe a sigh of relief as it will now be able to face off against Microsoft’s $42 billion bid for a takeover. Both these Online Search giants will try to draft this potential alliance in such a way that they would enable them to avoid any legal implications. However, according to some experts, this deal under no circumstances would undermine Microsoft’s dominance if it decides to march towards a takeover. In such a scenario, Yahoo! will simply pull out of the Google partnership and merge with Microsoft.

One of the main reasons for this deal is the additional cash inflow that Yahoo! will receive. Currently, Google generates more revenue per search query than Yahoo!. An alliance between the two would mean, an additional $1 billion per year revenue for Yahoo! However, this deal would be limited to specific groups of search queries or regions, so as to avoid any potential regulatory problems.

The decision for a possible partnership with Google comes just before Yahoo! announces its first quarter financial report, which will be released on April 22^nd 2008This reporting will greatly affect Yahoo’s determination for a higher bid from Microsoft. A strong report would give Yahoo! a stand against Microsoft stating that, it should be valued at more than what Microsoft had offered. On the other hand, a negative or a weak report will establish Microsoft’s point that Yahoo’s value has fallen in the months since it first made its offer.

This entry was posted on Thursday, April 24th, 2008 at 12:28 am and is filed under Search Optimization. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.