Yahoo turns to Google for help

Yahoo on Wednesday moved another chess piece in its bid to fend off a hostile takeover by Microsoft, announcing a deal to give advertising space to Google as part of a short-term deal that could lead to a bigger partnership.

As part of a two-week trial, Google-generated ads will appear next to some U.S. search results on Yahoo.

Yahoo's move - clearly an attempt to show its unwanted suitor that it has other options - was quickly met with resistance. Microsoft general counsel Brad Smith suggested that a formal Yahoo-Google alliance would be anticompetitive, and a powerful Congressman warned that he would be watching the partnership "closely."

The discussions with Microsoft's biggest rival come less than a week after Yahoo was given a 3-week deadline by Microsoft to come to the table and negotiate a proposed $42 billion buyout.

Yahoo reportedly has also held talks with AOL, a Time Warner unit and Fortune.com affiliate, and News Corp. about possible partnerships.

While the experiment suggests a potential partnership between the two search engine giants, Yahoo was quick to de-emphasize the significance of the move.

"The testing does not necessarily mean that Yahoo will join [Google's] AdSense for Search program or that any further commercial relationship with Google will result," Yahoo said in a statement.

Yahoo, along with a new effort by large stakeholder Legg Mason, is attempting to show that the company can thrive on its own. The risk here is that Yahoo may see Microsoft pull its offer leaving Yahoo to actually go it alone.

[Source]