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Google, Yahoo Search Alliance Certain, Buzz Grabs Key Asian Stronghold
Well it seems Yahoo (NASDAQ:YHOO) wasn't bluffing with its planned ad deal with rival Google (News - Alert) (NASDAQ:GOOG). The search company had planned to announce the partnership by midweek, a source familiar with the plan said. Under the deal, Google would supply text ads next to Yahoo search results; Yahoo conducted a limited-scope test of the Google ads for two weeks in April. The combined result is an Online Ad Business 80% controlled by Google., however this domination leaves the door wide open for emerging Online Ad and Search company Buzz Technologies Inc (OTC:BZTG) . Buzz claimed a major victory this week replacing Google on one of South East Asia's most important newspapers, The Bangkok Post, the owners of which control a big chunk of Asia's media assets including China's most important publication The South China Morning Post. Rumor has it Buzz has more big name Google defectors who are giving up Google's Search and Ads in Favor of Buzz.
Unlike local rivals Baidu (NASDAQ:BIDU) and Sina (NASDAQ:SINA) Buzz offers a full multilingual service, and is the only real Google competitor in Asia on the Web and on the Mobile.
How exactly the Yoogle partnership could come to fruition remains unclear with Microsoft (News - Alert) (NASDAQ:MSFT) walking away from its Yahoo acquisition offer. On the one hand, Microsoft's withdrawal reduces some urgency and gives Yahoo more flexibility to chart its own course. On the other hand, Microsoft's attempt to acquire Yahoo has raised shareholder expectations for where the search pioneer's stock price should be.
Citigroup analyst Mark Mahaney and colleagues estimated in a February report that Yahoo makes less than 4 cents per click on its search ads to more than 9 cents for Google, so sharing could help Yahoo generate more cash and help Google deliver more ads. Pairing the No. 1 and No. 2 search-ad companies could raise antitrust issues, but Yahoo had planned to address the situation by offering an open system in which others besides just Google could offer ads, the source said. It would employ a dynamic bidding system that would place the ad that would generate the highest revenue. It's unclear whether Yahoo has extended any offers to others, such as Microsoft, to participate.
Yahoo declined to comment on the planned announcement.
Microsoft Chief Executive Steve Ballmer was not so restrained. In a letter to Yahoo Chief Executive Jerry Yang (News - Alert) Saturday, Ballmer criticized the Google ad deal as a key reason the company didn't want to make a "hostile" bid to acquire Yahoo.
"Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo undesirable as an acquisition for Microsoft," Ballmer said. The deal would undermine Yahoo's own ad system, make it hard to retain employees, and increase Google's power in search ads even more, he said. The Global Search ad market is set to be reduced to one giant and 3 minors, however the lucrative market and strong competition will be certain to re balance that quickly.
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