San Francisco - An advertising alliance between Yahoo and
Google was viewed as increasingly likely Friday after Google CEO Eric
Schmidt said a two-week test had been a 'brilliant' success.
Expanding the test, which involved Google serving ads on Yahoo's
search pages, could increase Yahoo's revenues by over 1 billion
dollars a year, since Google's algorithms are 70 per cent more
successful at generating revenue-bearing click-throughs.
'We have had a brilliant test which was two weeks long,' said
Schmidt at the company's annual shareholder meeting Thursday. Asked
to comment on the scuttling of Microsoft's bid for Yahoo he replied:
'Obviously we are pleased that it's not going to happen.'
Google founder Sergey Brin amplified on the close ties between the
two companies, which were both founded by graduate students at
Stanford University.
'We were a big partner of Yahoo a few years ago,' Brin said. 'It's
great to be working with them again.'
Brin implied that the companies were in advanced talks towards
cementing an alliance. He said executives believed that they
could circumvent antitrust concerns since the ads were allocated on
an auction model which would prevent price fixing by what would be by
far the most dominant advertising platform on the web.
Google and Yahoo started the test as a way to foil Microsoft's
unsolicited bid for the company.
'We really believe in companies having choices in their destiny,'
Brin said. 'They were under hostile attack and we wanted to make sure
they had as many options as possible.'
Microsoft Chief Executive Steve Ballmer cited Google's test with
Yahoo as one of his reasons for terminating negotiations with Yahoo's
board. Microsoft formally withdrew its bid for Yahoo on May 3 after
raising its offer from 31 dollars a share to 33 dollars a share. At
the time, Yahoo said it would not consider a price below 37 dollars a
share.
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