Google, Yahoo, Microsoft and News Corp in 'epic fight'

10 April 2008

Microsoft's pursuit of Yahoo has become more complex, with the appearance yesterday of a series of announcements and leaks.

According to a report in the Wall Street Journal (WSJ), Yahoo and AOL are close to a deal that would see them combine their online activities, potentially thwarting Microsoft's takeover ambitions.

However, the New York Times reports that Rupert Murdoch's News Corp, which owns the WSJ, has entered into talks with Microsoft with a view to joining its Yahoo bid: a twist that has surprised many analysts. Previously, News Corp had approached Yahoo CEO Jerry Yang with an alternative deal that would have fended off Microsoft's advances.

Meanwhile, Yahoo has announced a two-week trial where Google's AdSense service will deliver 3% of Yahoo's advertising. Responding to the agreement, Microsoft general counsel Brad Smith said: "Any definitive agreement between Yahoo and Google would consolidate over 90% of the search advertising market in Google's hands."

Such dominance would raise the spectre of a competition investigation, but Yahoo says that the arrangement does not necessarily presage "any further commercial relationship with Google". Yahoo's share value climbed by 7% yesterday in response to the news, and some analysts interpret the agreement as a clever move to force Microsoft to raise its bid price.

Not all agree, however, with Michael Arrington writing that Yahoo's actions appeared "to be based on destroying their market value as a counter to the Microsoft bid, [benefiting] neither their stockholders nor their employees."

Category: Google, Natural search, Online marketing, Paid search, Search engines, Yahoo