Yahoo and Google partnership?

Yahoo and Google announced today that they will experiment working together by allowing Google to put ads that are tied to 3% of queries made through Yahoo's search engine. This testing partnership will last for approximately 2 weeks.

This partnership has put an interesting twist on Microsoft's bid for Yahoo, since its initial bid was too low for Yahoo. Yahoo is showing Microsoft that it can build alliances with other powerful companies, and its worth is greater than what Microsoft is willing to pay. All this comes after Microsoft claimed it would lower its bid on April 26th if Yahoo couldn't substantially prove it is worth more.

Google and Yahoo together have 81% of the US market share, but if Microsoft and Yahoo were combined, they would control 31% whereas Google would still take up 59%.

If a long-term alliance forms between Yahoo and Google, however, there could be anti-trust issues, but these are currently being scrutinized carefully.