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.
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.