Yahoo Reaches Search Partnership with Google

U.S. search engine Yahoo said Thursday it has reached an agreement with rival Google on Internet advertising partnership, which could boost its revenue by some 800 million dollars.

The Silicon Valley company made the announcement after its shares sank 10 percent in the stock market. Yahoo earlier in the day announced that it had ended talks with Microsoft after the two sides couldn't reach a deal for a full acquisition or a search spinoff.

Under the deal with Google, Google-brokered advertisements will appear alongside some of Yahoo's search results and on some of its Web pages, Yahoo said in a statement.

The companies said they didn't have to receive regulatory approval but would wait for three and a half months before kicking off the partnership so that the government could review the arrangement. Analysts said the deal is likely to face heavy regulatory scrutiny.

Herb Kohl, chairman of the U.S. Senate Antitrust Subcommittee, said his panel plans to investigate the competitive and privacy implications of the Yahoo-Google deal as its consequences for advertisers and consumers could be far-reaching.

Microsoft is likely to oppose the partnership in fears that the deal would harm competition. The software giant announced a 44.6-billion-dollar unsolicited offer to take over Yahoo in February and then said it would only buy its search business, but the proposals were rejected by Yahoo management.

Meanwhile, Yahoo faces rising pressure from its shareholders as billionaire investor Carl Icahn, who is not satisfied with the management's handling of the Microsoft offer, is fighting for control of the company and the ouster of its current CEO Jerry Yang.