Google search ad outsourcing 'closer for Yahoo!'

18th April 2008

Yahoo! and Google have completed a preliminary test for a search ad outsourcing deal, a new report suggests.

According to the Wall Street Journal, Yahoo! is closer to a deal that would see its search advertising business outsourced to Google after the test yielded positive results.

Such a deal could give Yahoo! increased resistance to Microsoft's $31 (£16) -per-share offer to buy the web pioneer.

The news comes as the deadline of April 26th set by the software giant for Yahoo! edges closer.

Regulatory bodies could potentially raise concerns of any arrangement between Google and Yahoo! that would reduce competition in the search ad sector.

But Mark Mahaney, a Citigroup analyst, told the Telegraph that Yahoo!'s cash flow could be increased by £1 billion through such an agreement, as Google earns more revenue per query than its competitor.

Meanwhile, the Associated Press reports that Microsoft has employed Bryan Cave Strategies LLC to lobby federal government over the prospective buyout.