Minutes after announcing the end of negotiations for its sale to Microsoft, the search engine Yahoo has announced an advertising agreement with one of its main competitors, the search engine Google. As reported by the orange search engine in a statement, the possibility of displaying Google advertising on its portal and in its search results could bring it about 800 million dollars more in annual income.
Shortly after the decision to end negotiations with Microsoft was made, Yahoo shares fell 23,52% on the stock market. Once the announcement of the agreement with Google was made, its value recovered by 24% in deals outside market hours.
"I think the agreement with Google gives us a faster way to revalue ourselves," its CEO, Jerry Lang, explained to Yahoo investors in a conference call. Lang has emphasized not ruling out any possible merger with anyone, including Microsoft. The executive believes that the company is establishing itself in its business.
Yahoo! President Susan Decker has also addressed shareholders to assure them that they had negotiated a competitive percentage of the advertising revenue they would derive from Google, but she refused to give the percentage that Google would pay them for referring traffic to them. . The deal does not grant exclusivity to Google in the supply of advertisements and will last for ten years, divided into a period of four plus another two renewable three-year periods.
The news has also raised suspicions among the US anti-competition authorities. The president of the Senate antitrust subcommittee, Virginia Senator Herbert Kohl, has warned that his organization will "examine with a magnifying glass" the collaboration between the search engines, since this "gives raises important doubts regarding competition". "The consequences for consumers and advertisers may be far-reaching and require detailed examination. We intend to examine the implications for privacy and competition later in this subcommittee," Kohl explained in a statement.
The companies have specified that, although they do not need the approval of the US regulatory authorities to implement the agreement, they have decided to delay its application for up to three and a half months to give the Department of Justice time to review it.
No merger with Microsoft, for now
Regarding the frustrated agreement with the creator of Windows, the search engine has explained in a statement that "the end of the talks occurred after numerous meetings with Microsoft in reference to different alternative transactions" among which is the one held on December 8. June in which Yahoo board chairman Roy Bostock and other Yahoo board representatives took part.
"At that meeting, Microsoft representatives showed unequivocally that they were not interested in purchasing all of Yahoo even in the previously suggested price range," the company says.
On the other hand, Yahoo's board determined that the sale to Microsoft only of the search business, as the company chaired by Bill Gates had proposed, was not "consistent" with the company's vision and would leave Yahoo! without an independent search business, which he believes is "critical to its future strategy," so it would not be in the best interest of Yahoo! shareholders.
long struggle
Microsoft announced in mid-May its intention to study options to continue with its attempt to purchase Yahoo!, after having failed in February in its first attempt when the portal rejected an increase in the price of 5.000 million dollars, up to 47.500 million dollars (30.687 million euros).
Microsoft's initial offer was $33 per share, but Yahoo did not lower its request to $37 per share. The computer group had initially offered $31 per title. This new offer that the giant Microsoft was studying no longer proposed the complete acquisition of Yahoo!, but of some of its divisions.
In the middle of this struggle, American magnate Carl Icahn emerged and, after taking a stake in Yahoo, tried to force the board of the popular search engine to reopen negotiations with Microsoft.