Yahoo and Google reach ad agreement

Advertising from Google will be displayed alongside Yahoo! search results, after the two companies reached an agreement for shared use of AdSense technology. The non-exclusive advertising agreement was announced shortly after Yahoo! ended talks with Microsoft over possible investment and acquisitions by the software giant.

Yahoo! now has the ability to use Google's search and contextual advertising technology. Under the agreement, Yahoo! has the option to display Google ads alongside its own natural search results in the U.S. and Canada. In addition, Yahoo! can serve contextually targeted ads on its U.S. and Canadian web properties as well as on its current publisher partner sites.

Yahoo! and Google will also work to enable interoperability between their instant messaging services.

Google VP Omid Kordestani explains the details on the Official Google Blog:

It is important to say what this agreement is not:

• This is not a merger. Rather, we are merely providing access to our advertising technology to Yahoo! through our AdSense program.
  
  
• This does not remove a competitor from the playing field. Yahoo! will remain in the business of search and content advertising, which gives the company a continued incentive to keep improving and innovating. Even during this agreement, Yahoo! can use our technology as much or as little as it chooses.
  
  
• This does not prevent Yahoo! from making similar arrangements with others. This arrangement is not exclusive, meaning that Yahoo! could enter into similar arrangements with other companies.
  
  
• This does not increase Google's share of search traffic. Yahoo! will continue to run its own search engine and advertising programs, and the agreement will not increase Google's share of search traffic.
  
  
• This does not let Google raise prices for advertisers. Google does not set the prices manually for ads; rather, advertisers themselves determine prices through an ongoing competitive auction. We have found over years of research that an auction is by far the most efficient way to price search advertising and have no intention of changing that.