Yahoo! to Test Google Adsense; Microsoft Somewhat Displeased

Wednesday Yahoo! announced that it would be starting a limited trial of Google AdSense for Search service. This would deliver Google ads alongside Yahoo!'s search results, rather than Yahoo! ads. Yep, essentially Yahoo! is trying outsourcing Search Ads to Google.

It's clear that this move is one of the alternatives Yahoo! is looking at in response to Microsoft's unsolicited takeover bid. As you may recall Microsoft pretty much threw down the gauntlet, giving Yahoo! three weeks before Microsoft will start what sounds like a hostile takeover attempt.

According to Yahoo!'s press release,

The test will apply only to traffic from yahoo.com in the U.S. and will not include Yahoo!'s extended network of affiliate or premium publisher partners. The test is expected to last up to two weeks and will be limited to no more than 3% of Yahoo! search queries.

As previously announced, 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.

To say Microsoft was not pleased is an understatement. In fact, they shot off their own press release, with Brad Smith, Microsoft’s General Counsel saying:

"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."

Waitasec, that's exactly what Yahoo! said the other day when it replied to Microsoft's three week ultimatum - only in reference to a Yahoo! / Microsoft tie-up. Hmmm.

If anyone thought the drama was decreasing over Microsoft - Yahoo!, it sure ain't.