Will Yahoo Hand Over Its Paid Search Business To Google?

Would Macy’s tell Gimbels? Maybe

With Yahoo and Google considered such big rivals these days, many people forget that they were originally partners. For many years, Google provided the search engine that powered Yahoo, while Yahoo focused on all of the various other properties it had. It was only way too late that Yahoo realized just how much money Google was pulling in via paid search and went on a buying spree to buy up nearly every other serious player in both the paid search and search technology business. However, stringing together all of those businesses was a lot more difficult than Yahoo expected, and it only gave more time for Google to run away with its lead in the space.

Only recently did Yahoo come up for air and realize how far off course things had gone. The company jettissoned CEO Terry Semel in favor of founder Jerry Yang, who's now apparently considering all possible options. According to Kara Swisher, that includes giving up in paid search and partnering with Google again, though, this time for paid search and not just pure search. Apparently, despite the rivalry, executives from the two companies talk quite often and have even sketched out how such a relationship might work. It's probably a long way from reaching that point, but it's probably going to look more and more appealing. Yahoo is spending a ton of money just to catch up and tread water, while Google would let them save a lot while potentially allowing them to earn a lot more as well. It may hurt their pride, but it's probably the right move.

http://techdirt.com/articles/20070810/033148.shtml