You mix apples and oranges.

“Yahoo and Google have completed a preliminary test of the trial deal to outsource Google ads to Yahoo search queries announced last week”. See, they outsource ads.

“its very likely that Yahoo would see a gradual decline in search volume if they were to outsource to Google (as has happened with AOL, which moved to Google search“. See, AOL saw decline in search after they outsourced search.

I have never heard yet that Yahoo is considering outsourcing search. The whole deal is only about ads as for now, and I don’t see any reason why outsourcing ads could directly affect their search market share.

It is a real shame to see one of the original “web 1.0″ big brands go this way though (”give up” and just use Google - or - get eaten by MS) but times change I guess.

Now way back in 1995/96, Yahoo merged with Geocities after beefing up their value on paper. Those were the days of virtual dotcom purchases.
I sense a similar approach (ref:interesting theory), but with the search traffic results.

Since the issue is more of market share and less to do about search engine algo as such, its down to sensible business moves. If yahoo goes google, other than less breathing space, its a harakari for them. Why? Google is now behaving like the old Microsoft [on a quest for world domination].

The only logic I see in Yahoos approach is to tie up with the possible winner early enough and not to incur terrible Google wrath later on when it tries to overtake Microsoft.

Whether regulators want to slice and dice Google because of the ensuing monopoly is another question.

That is not accurate the FTC does have authority over business agreements

Harry “poor lil Jerry” Wang

1) a search deal with Google does not need authorities approval, it is not a merger. If they would have done it sooner, it would have blocked the doubleclick deal, but now it won’t have effect.

2) doing such a deal would not do a death blow to Yahoo. Yahoo visitors don’t care where the ads come from. In fact, if the ads on the page are more relevant to what they are looking for, they are more likely to return.

3) The cash flows are likely to increase by far more than 25%, that Citigroup analyst is plain and simply wrong. By Yahoo’s own admission, the gap between Yahoo and Google search ad revenues is 60-70%. If they change to Google ads and get that boost and Google keeps about 30% of those revenues from Yahoo (that is about what they keep on average, according to quarterly financials about Adsense), the boost to bottom line is 0.65 * 0.7 = 0.455 or about 45%, almost twice what the analyst was thinking about. Add to that the reduced development, personnel, back office, etc cost from driving down their own ad serving efforts and you get to much higher figure. There are basically no costs to replacing Google ads instead of Yahoo search ads, so the difference goes directly to bottom line.

How? Can you explain how or your just another “open sourcer” who dose not like to pay for software?