As you would expect from a company that operates the world’s most popular search engine, search ads constitute an important source of revenue for Google. Launched in 2000, Google Adwords has always stuck to the text-based, cost-per-click ad model it debuted with. However, the search engine giant is always searching for “innovative ways for advertisers to engage users on Google.com.” To this end, it’s now experimenting with a new ad format.
After Yahoo turned down Microsoft’s proposal to roll in the hay and have an offspring that could take on Google’s might in the online search market, it appeared the two would maintain a distance from each other. However, a luncheon meeting between Ballmer and Yahoo Chairman Roy Bostock earlier this year again revived hopes of a deal.
The New York Times reports that the two companies have returned to the negotiation table, though for a slightly different purpose. A source close to the discussions told the NYT that the two companies are discussing an advertising deal. The source revealed that Microsoft could assume control of Yahoo’s search ads and leave Yahoo in control of display ads under one arrangement being deliberated. Steve Ballmer is also said to have met with Yahoo CEO Carol Bartz last week. There is no official word on the matter as yet.
Yahoo’s search ads deal with Google might have come as a shock to most but it elicited a different emotion among legislators, that of suspicion. Yahoo has made its 50 page agreement with Google public amid all the talk of it being anti-competitive. It filed the document with the Securities and Exchange Commission as a supplement along with its quarterly report card. But certain parts of the agreement are not available to the public and have been made available to SEC separately.
The prospects of an antitrust lawsuit still loom over the search ads deal, which capped Yahoo’s brazen defiance towards Microsoft. However, don’t mistakenly assume that the SEC is probing the matter. The probe into the legality of the agreement is being carried by U.S. Department of Justice and various states.