Yahoo and
Google's paid search deal is officially on, according to Google CEO Eric Schmidt. Schmidt said that Google would likely start serving some of the sponsored listings on Yahoo's search pages by early
October, during an interview with Bloomberg Television in Denver last week. "We are going to move forward," Schmidt was quoted as saying.
In early June, both companies publicly
announced the terms of the deal, which is slated to run for four years with the option to renew in three-year increments afterward. Yahoo CEO Jerry Yang and President Sue Decker maintained that the
partnership would only pertain to some of the "long tail" queries (or very specific keywords or phrases) that the company was having trouble monetizing. "We can take advantage of where Google performs
really well and still deliver our own results where we can offer comparable or better value," Decker said.
Yahoo's top brass said that they expected the deal to generate as much as $450 million in
incremental income in the first 12 months. They also assured shareholders that they'd have full control over which pages the ads would show up on and how they'd be displayed.
Still, many industry
experts have criticized the deal, arguing that it greatly reduces competition in the search marketplace. Google's share of the search market is upwards of 60% by most third-party accounts, while
Yahoo's hovers between 16% and 20%. Opponents like Microsoft say that it will give Google too much power, and the Justice Department launched a formal anti-trust investigation in July.
In the
Bloomberg interview, Schmidt said that the parties were in the process of talking with the government. "They've not indicated one way or the other how they're dealing with us," he said. "We always
worry a little bit, but we think our arguments are pretty strong."