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Yahoo! hits back at Microsoft with Google ad test

Yahoo! hits back at Microsoft with Google ad test

Yesterday, Yahoo! said that it would be running a limited test of Google's AdSense for Search service, delivering relevant Google ads alongside Yahoo!'s own search results.

At this stage, the service will only be applied to traffic from Yahoo.com in the US and will last for up to two weeks.

There are also further reports that Yahoo! is in talks with Time Warner about taking on AOL internet assets in another move designed to thwart Microsoft's $44.6bn takeover bid.

Separately, there is speculation that Rupert Murdoch's News Corporation is in talks with Microsoft about joining its bid for Yahoo!. The New York Times says that the negotiations are at a "sensitive stage", but none of the parties would comment on the rumour.

Microsoft first made an offer for Yahoo! in January, but Yahoo! board of directors said that it significantly undervalued the company.

This month, Microsoft wrote to the directors of Yahoo! saying that if they did not accept their offer within three weeks, it would approach Yahoo! shareholders directly, and that it would offer less money than it had initially.

Since Microsoft first made its offer, Yahoo! has been looking for a white knight -- although the directors have made it clear that they do not oppose a deal with Microsoft in principle, as long as it is at the right price. Any deal with Google or AOL could help Yahoo! negotiate a higher price.

Google has objected to Microsoft buying Yahoo!, and in response to the news of the AdSense test programme, Microsoft has objected on the grounds of anti-competitive behaviour.

The company's lawyer, Brad Smith, said: "Any definitive agreement between Yahoo! and Google would consolidated over 90% of the search advertising market in Google's hands; this would make the market far less competitive."


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