Yahoo, Google announce experiment in sharing ad space

SAN FRANCISCO — Yahoo Inc. is turning over some of its advertising space to Internet search leader Google Inc. as part of a two-week test that could lead to a broader partnership.

The experiment the companies announced Wednesday will allow Google to place ads alongside about 3 percent of the queries made in the United States through Yahoo's search engine — the Internet's second largest after Google's.

Sunnyvale-based Yahoo said it hasn't decided to join the thousands of other Web sites that rely on Google to handle most of the text-based advertising that is tied to search requests or other online content.

Just the prospect of Yahoo working with the Internet's most profitable company throws a new dynamic into its effort to extract a higher takeover bid from its unsolicited suitor, Microsoft Corp.

Yahoo insists it's worth more than the initial bid of $44.6 billion, or $31 per share, that Microsoft made more than two months ago.

But Microsoft has held firm and threatened to lower the bid unless Yahoo accepts it by April 26.