In yet another surprising twist, Yahoo! announced that it would begin a limited two week long testing of Google AdSense for search. This will enable the users to see Google advertisements alongside Yahoo! Search result pages. This test merger would however show up in US search result pages only and would also be no more than 3% of Yahoo's search result pages. This move on the part of Yahoo! Inc is being considered as an experiment by the board of directors, who are exploring the possibilities to maximize the stockholder value.
As of now, Yahoo! isn't looking forward to any long term relationship with Google or any other third party. But, considering the rapid change of events that have happened in the last few weeks, I wouldn't be surprised if Google and Yahoo come up with a partnership. As per Yahoo's announcement, "Yahoo!'s board of directors is exploring strategic alternatives to maximize stockholder value, including exploration of potential commercial business arrangements. The Company noted that the testing does not necessarily mean that Yahoo! will join the AdSense for Search program or that any further commercial relationship with Google will result. The Company further stated that it would not comment on the nature or timing of any potential relationship."
Google in a statement said, "Yahoo will be testing Google's AdSense for Search service, which will deliver relevant ads alongside Yahoo's own natural search results. This is only a limited test and does not necessarily mean that Yahoo will join the AdSense program."
Some experts think that, sort of an arrangement between Yahoo! and Google will significantly boost Yahoo's revenues, because Google's system generates more revenue for each search query than Yahoo's.
Yahoo (CEO) Jerry Yang in statement said, "We believe having a principal position in both search and display advertising is critical in creating long-term shareholder value," This announcement from Yahoo! about testing Google Ad Sense in its SERPs must have terribly hurt the dominant ego of Microsoft. Immediately after the Yahoo! announcement, Microsoft came out with a pretty strong rebuttal statement of its own. Microsoft said, "Any definitive agreement between Yahoo! and Google would consolidate over 90% of the search advertising market in Google's hands. This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo! We will assess closely all of our options. Our proposal remains the only alternative put forward that offers Yahoo! shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers."
It's quite certain that Yahoo! would never let go off its search marketing technology. This is just another strategy being played by Yahoo! in the game of 'tug of war' between Yahoo! and Microsoft.