Yahoo opens Google AdSense account

by Mathew on June 12, 2008 · 13 comments

If you smell anything wafting from Yahoo’s headquarters in Sunnyvale, it could be the rising stench of desperation. Unable to conclude a deal with Microsoft — for a variety of reasons that range from bizarre to ridiculous — the faded Internet giant has been reduced to signing a deal with Google to take over some of the advertising on its Web properties. As someone mentioned in one of the comments I saw, this is like Ford signing a deal to have its cars built by Honda (or like this). It is, effectively, an admission of failure — a failure to monetize its own assets properly, and ultimately a failure to compete in search period.

Google’s blog post about the deal takes pains to point out that this “does not remove a competitor” from search, and “does not allow Google to raise prices for advertisers,” and so on — in a commentary that is so obviously designed to placate the U.S. government that it might as well start out with the words “Dear Anti-Trust Investigators” — but the fact is that Yahoo doing such a deal means its search will inevitably wither even faster than it already was. It would be almost cruelly ironic if Microsoft, which has been on the receiving end of so many anti-trust machinations in the past, were to use anti-competitive issues as a cudgel with which to beat Yahoo into accpepting a low-ball takeover.

For more details on the deal, you can see live notes from the conference call at Silicon Alley Insider and Erick Schonfeld over at TechCrunch has put together some as well. I know I should care, but I confess that I have virtually no interest in this deal whatsoever.

Update:

TechCrunch has the text of the agreement between Yahoo and Google, which was filed with the SEC. Interestingly enough, it describes a $250-million “kill fee” that has to be paid if the deal is severed due to a takeover of Yahoo — unless that takeover is an acquisition by Microsoft.

  • http://www.centernetworks.com centernetworks

    nice title dude

  • http://www.mathewingram.com/work mathewi

    Thanks, Allen :-)

  • http://blog.clutterme.com Mark

    I personally took the time to come over from my RSS reader to say how much I love the line “If you smell anything wafting from Yahoo’s headquarters in Sunnyvale, it could be the rising stench of desperation”.

    As an added bonus I also enjoyed “obviously designed to placate the U.S. government that it might as well start out with the words “Dear Anti-Trust Investigators”.

    One of the best tech commentaries I've read in weeks.

  • http://www.mathewingram.com/work mathewi

    Thanks, Mark. I appreciate you taking the time to come and comment — that means a lot. And thanks for reading too :-)

  • http://virtualeconomics.typepad.com Seamus McCauley

    Your title is the best summary of the Yahoogle deal on the web. Good call!

  • http://www.mathewingram.com/work mathewi

    Thanks, Seamus.

  • Pingback: I like the Yahoo-Google deal, am I the only one?

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  • http://joeduck.wordpress.com JoeDuck

    Not desparation, but the smell of huge, flaming stacks of shareholder cash. $34 (MS offer) – $23 (approx price) x 1.38 billion shares = $15 billion dollar fire sale…. with Google picking up the bargains.

  • http://www.mathewingram.com/work mathewi

    Indeed. Nothing like a giant bonfire of investors' money to keep Jerry
    Yang and the Yahoo board warm at night :-)

  • http://joeduck.wordpress.com JoeDuck

    To Jerry Yang and the board's dubious credit they are among the biggest losers in terms of diminished stock value, making their chain of decisions even more difficult to comprehend. When exactly are they expecting the stock to hit $34 again based on current plans and projections? I think I'd argue that the Google deal essentially proves that Icahn was right about self destructive behavior. Yahoo either should sell to MS or clearly demonstrate they have great plans and prospects for the future. The Google deal flies in the face of both options.

    Can I borrow some marshmallows? This Yhoo stock has got to be good for something…

  • http://www.direito2.com.br zevallos

    Well… I think Yahoo lost it's mind… because they will give up their profit to Google? Like this? I don't know…

  • http://www.direito2.com.br zevallos

    Well… I think Yahoo lost it's mind… because they will give up their profit to Google? Like this? I don't know…

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