Finally Yahoo decided to cave in and has decided to partner with Google to display relevant alongside its search results in the US and Canada. This surely is the beginning of the end of the ambitious Panama project.
If you remember Yahoo had announced a similar deal a couple of months back that was more of a test to see the returns from the ads by Google. From what I’ve heard, Yahoo was extremely satisfied with the returns and that’s why this deal is happening today.
Yahoo has spent a lot on Panama, the advertising platform that was built to compete with Google Adwords. But somehow Google managed to stay on, and Yahoo has seen less ad dollars compared to Google on its search advertising front.
You can read the Google blog post about the deal, but here is the main gist of the deal.
Finally it looks like Steve Ballmer and his team found too much of trouble running behind Yahoo for the past three months. Microsoft considers Yahoo to be its golden goose, and it feels that it will lay golden eggs in the future of online advertising.. I had written a post detailing What A Combined Microsoft Yahoo Looks Like weighing all the pros and cons if this deal went through. Somehow Yahoo managed to push Microsoft to such an extent that it had no choice but to accept defeat.
Now that Yahoo is staying on as an independent company, Jerry Yang and his team have some important tasks at hand. Let me reserve what exactly do they need to do for another post and focus on the ramifications of the breakout of this deal.
Microsoft issued a statement here
“Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer. After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal,” said Ballmer.
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