Google keen to expand ties with Yahoo

Internet search engine leader Google is keen on extending its advertising partnership with rival Yahoo, with whom it shared shared advertising space last month for US advertising. (See: Yahoo to test Google AdSense; in alliance talks with AOL)

The comments came from Google co-founder Sergey Brin and chief executive Eric Schmidt at Google's annual general meeting yesterday, who is reported to have said, "We share a lot of values with them."

Brin was quoted as having told shareholders that Google had been talking to Yahoo "and we are very excited to be working with them."

Last month Yahoo conducted a two-week test of Google Adsense for selling ads alongside its own website as an alternatives to Microsoft Corp's $44.6 billion takeover offer. At that time Microsoft had warned that a Yahoo-Google alliance would cover around 90 per cent of online advertising, and could therfore run into regulatory hurdles. Infact, Maicrosoft had been keen on acquiring Yahoo, to try and compete as an effective number two to Google for online advertising.  

The deal had drawn comment from the justice department that it would scrutinise the arrangenment for legal compliance. According to reports, the justice deparetment was concerned about a longer-term deal between the No 1 and No 2 search-engine companies that could thwart competition.

Yahoo's experiment to build advertising partnerships with Google was cited as a significant factor for Microsoft from pursuing the merger, as the software giant had been hoping to take on Google by combining with Yahoo.

In his letter to Jerry Yang, calling off the talks, Microsoft CEO Steve Ballmer said, "We regard with particular concern your apparent planning to respond to a 'hostile' bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo undesirable to us."  (See: Microsoft CEO Steve Ballmer's letter to Yahoo! co founder and CEO Jerry Yang)