People Search Digest

It’s been a tough few weeks for Yahoo!. First Microsoft withdrew their offer to purchase the ailing company for $44.6 billion after drawn out negotiations. Then billionaire bully Carl Icahn sent a very nasty, very public letter to Yahoo!, an incident that was detailed on this site last month. With its stock dropping steeply and a spurned Microsoft feeling uncharitable, it seemed quite certain that Yahoo! would be forced to play nice with their competitors to stay afloat. The Internet was aflame with speculations: Would an unhappy Microsoft play nice? Would Icahn succeed in forcing out Yahoo! founder and CEO Jerry Yang? And what was the strangely silent Google plotting in their Mountain View complex? Yesterday we got an answer. Sort of.

As most people know by now, late yesterday afternoon Google and Yahoo! announced they would be forming a non-exclusive search agreement, allowing Yahoo! to access Google’s AdSense technology on their American and Canadian webpages. In addition both companies would begin working on making their respective messaging systems compatible with each other for better communication between users. On the official GoogleBlog, Senior Vice President of Global Sales and Development Omid Kordestani emphasized that this was not a merger in the traditional sense, but rather a move that would benefit both companies by streamlining the process of correlating advertising to search terms.

It was a rather anti-climactic announcement for denizens of the Web who not-so-secretly hoped Google and Yahoo! would combine powers and take out the Microsoft juggernaut in one afternoon, but those who are waiting for their Goohoo! homepages would be well advised to not hold their breath. It’s unlikely that Google is even interested in a blatant merger with Yahoo! as such a deal would almost certainly draw the attentions of the federal government - with a costly, lengthy antitrust lawsuit to follow (something Microsoft knows all about). But Google’s fear of the feds doesn’t mean it’s not sizing Yahoo! up for something more serious in the future.

Some Yahoo! fans have protested that using Google’s AdSense technology is counterproductive and will only give users another excuse to switch to Google. In his blog post, Kordestani explains that Google has similar contracts in place with AOL and Ask.com. For Google, sharing technology with Yahoo! doesn’t eliminate future competition; it makes it better. “The Internet is a healthy, competitive environment where content creators, advertisers and users come together to access information, communicate and create new business opportunities. We think this deal extends these benefits — it’s good for users, advertisers and publishers and good for the industry.” he writes.

In any case, Yahoo! must be breathing a sigh of relief to know that its largest Silicon Valley neighbor is at least pretending to be looking out for its interests after a humiliating encounter with Microsoft. And speaking of Microsoft, they have as of yet kept mum on the joint announcement, but it’s reasonable to assume that if they weren’t scared of Google before now, they now have reason to tremble.

By Mariana M.