Filed under: Deals, Competitive strategy, Google (GOOG), Yahoo! (YHOO)
After Microsoft Corp. (NASDAQ: MSFT) walked away from a $40+ billion dollar deal with Yahoo, Inc. (NASDAQ: YHOO) this past week, competitor Google, Inc. (NASDAQ: GOOG) was very, very relieved. After all, a combined Micro-Hoo would have been a significant competitor (in a best-case scenario) to Google. To help dissuade both celebrations to make a deal, Google ran a two-week test on Yahoo! to supply the competitor with its own advertising system. The test went well.
Now that Yahoo! has proved that is could one day dump its search technology and outsource that piece of its business to Google, Google executives are looking for that exact scenario. They believe it will help prevent another attempt by Microsoft to buy Yahoo! in the future. They are probably right — if Google were to become one of Yahoo!’s largest partners, there would be issues with Microsoft buying Yahoo! now or in the future, from a regulatory perspective.
Google co-founder Sergey Brin said that “We have been talking to Yahoo and we are very excited to be working with them … we share a lot of values with them” in his remarks at yesterday’s annual Google shareholder’s meeting at Google’s Mountain View, Ca. headquarters. Brian added that a potential deal with Yahoo! was “not about scuttling (the deal).” Hogwash — I state that was exactly why the Google-Yahoo! test was performed. Look for a Yahoo!-Google search advertising partnership in the very near future, folks.
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