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As Rumored, Yahoo and eBay Forge Partnership

Following a speculative report yesterday from JPMorgan, Yahoo and eBay this morning announced a multi-year advertising and commercial partnership aimed at boosting their languishing positions against search juggernaut Google. According to the deal, Yahoo will be the exclusive third-party provider of all graphic ads appearing on eBay's auction site. In turn, Yahoo will implement PayPal, eBay's payment system, as a way for its customers to pay for Web services. The companies will also release a co-branded toolbar that is expected to drive traffic to both sites and combine to create a click-to-call advertising technology they will both use. No mention was made of a search partnership. Yesterday's JPMorgan report from analyst Irman Khan said Yahoo would gain substantial revenue from placing banner ads across eBay's sites. Both companies' stock prices received a bounce on news of the new alliance.

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