The Microsoft and Yahoo! deal is off. It’s water under the bridge living Microsoft with a disappointing note and Yahoo’s stocks plunging down. Top Yahoo executives leaving the company.
All that aside Yahoo and Google had announced a non-exclusive advertising service agreement where Yahoo could use Google’s advertising services in Yahoo’s web assets in U.S. and Canada. This gives Yahoo access to use Google’s Adsense / Adwords services throughout their site. Aspect to see Google Adsense in Yahoo’s search result pages some time soon.
In addition to that, both Yahoo and Google will work on enable interoperability between instant messaging service of both companies. This will result on a better broader online communication services. GTalk isn’t doing that well so this is a good thing for Google. You might be able to chat on your YM buddies on your GMail account in the future.
Yahoo is estimating that this deal will bring in up to $800 million additional revenue per year in the long-run, a $250-$450 million in the first twelve months after implementing Google ads.
I’ve to admit that my math is not that good, so you can correct me if I am wrong in saying that $800 million is less then almost $12 billion Microsoft is offering for Yahoo a few month ago. Not to mention that this deals solidifies Yahoo’s position as a distant second place to Google.
However, if I were Yahoo, I think I too will choose this deal over what Microsoft is offering. This agreement is not a merger between Yahoo and Google. It is more like Yahoo signing up on Google Adsense program. This does not prevent Yahoo form making similar arrangements with others. This does not mean that Yahoo will be using Google’s search engine, Yahoo will still continue to run its own search engine.
Yahoo is free to make use of Google advertising service as much or as little as they wish. This gives Yahoo some revenue while still maintain to be free in building other ventures. Some of Yahoo’s project looked promising. Yahoo! Live for example is one of them. Yahoo might just come back with the next big thing.
I uses quite a few of Yahoo products, Flickr, Del.icio.us and Yahoo Messenger. I would want Yahoo to stay relevant and keep making this product better.
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