Under this agreement, up to 3 percent of Yahoo's search volume will get Google ads slapped onto their results for a period of up to two weeks. It doesn't sound like much, but industry analysts have speculated that outsourcing the entire Yahoo search advertising function to Google might increase the company's cash flow by 25 percent in the first year. Google's monetization power is simply that much stronger. Let's hope for a detailed update on the outcome of this proof-of-concept when it's over.
That test comes only two days after Chief Yahoo Jerry Yang told Redmond counterpart Steve Ballmer in no uncertain terms that the offer currently on the table still isn't good enough. Microsoft has already issued a response to today's news, noting that a Google-Yahoo partnership could create a near-monopoly with over 90 percent of the search advertising market under their control. "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," says Microsoft general counsel Brad Smith.