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Yahoo, Google To Partner on Advertising
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Sen. Herb Kohl (D-Wis.), chairman of the Senate Antitrust Subcommittee, said his panel will scrutinize the proposal.
"This collaboration between two technology giants and direct competitors . . . raises important competition concerns," he said in a statement. "The consequences for advertisers and consumers could be far-reaching and warrant careful review."
Under the agreement, Yahoo would be able to use Google's advertising technology on as many or as few of its search results and content pages as it chooses. Yahoo chief executive Jerry Yang said the company could expect to increase cash flow by $250 million to $450 million annually.
The agreement has a term of up to 10 years: a four-year initial term and two three-year renewals at Yahoo's option. Under the deal, the companies would also enable their instant-messaging systems to work with each other.
The announcement of the Google-Yahoo partnership followed by just a few hours the news that negotiations between Yahoo and Microsoft had ended. The Microsoft-Yahoo negotiations fell apart over the weekend, according to Yahoo.
"Microsoft representatives stated unequivocally that Microsoft is not interested in pursuing an acquisition of all of Yahoo!, even at the price range it had previously suggested," Yahoo said in an announcement.
Microsoft had earlier offered to buy Yahoo for $33 a share.
More recently, the two sides had also discussed the possibility of Microsoft buying Yahoo's search-engine business. That would have allowed Microsoft to gain market share against Google. But those negotiations are now also over.
"Yahoo!'s Board of Directors has determined, after careful evaluation, that such a transaction . . . would leave the company without an independent search business that it views as critical to its strategic future," the Yahoo announcement said.
There was no immediate comment from Carl C. Icahn, the billionaire investor who has launched a proxy fight at Yahoo in hopes of forcing the company to accept a buyout offer from Microsoft.
Microsoft issued a statement saying that since it withdrew its bid for Yahoo, "the two companies have continued to discuss an alternative transaction that Microsoft believes would have delivered in excess of $33 per share to the Yahoo! shareholders."
Microsoft said it was no longer interested in acquiring all of Yahoo. But it said it was still open to an "alternative transaction" -- presumably the acquisition of Yahoo's search-engine and advertising units.
