United We Stand!

In wake of the ever growing competition between companies, Yahoo Inc., the world's largest Internet media company, and the world's leading ecommerce company and web auctioneer, eBay Inc. realizing the need for symbiotic existence have in principle agreed to form a broad alliance in the United States designed to boost their positions and survive the challenge that they face from Google Inc. and Microsoft Corp.

With this deal, Yahoo, will become the exclusive provider of graphical advertising on eBay, the biggest e-commerce player. It will also provide some search services within eBay's site to connect buyers to items they seek in the most efficient manner.

In return, Yahoo will promote PayPal, EBay's popular online payment system, as a way for Yahoo affiliated Web sites and small business owners to conduct transactions online.
In addition to this, the two companies will also cooperate in developing a click-to-call advertising feature on eBay's internet telephone company Skype, which would seamlessly initiate a phone call between consumers and representatives of the advertising company.

Giving details of the deal, John Donahoe, the president of eBay's marketplaces unit, said, "The very new part is for eBay to really leverage Yahoo advertising onto eBay properties. We think this can both enhance our business and build a better experience for users," he said.

Voicing a great outlook with the help of the deal, eBay president and CEO Meg Whitman, said, "Yahoo! offers an engaged online audience, which drives massive traffic through its rich consumer content and premium services. Working together, we can create more exposure for our properties, which in turn makes them more valuable to our users."

However, cleverly evading the disclosure of any future plans, Donahoe, said, "We will see. We think there is so much opportunity right in front of us. That's where our focus will be in the next six to 12 months."

Chief Financial Officer Susan Decker too declined to comment on whether the possibility of an outright merger was involved.

However, according to both the companies, the alliance will not have a material impact on 2006 results for either. The companies are expected to roll out their joint initiatives later this year.

With the markets celebrating the get together of the two giants, the shares of eBay jumped .70, or 8.9 percent, to .90 on Nasdaq, while Yahoo was up .11, or 3.5 percent, to .90. Correspondingly, the shares of Google fell about 1 percent to 7.98.

However, monetising the searches made by yahoo by placing ads in front of shoppers raises some difficult questions for eBay. This is because, sellers pay listing fees for displaying their goods on eBay and being included in its internal search results. Putting ads on these pages could frighten buyers away, creating a form of competition that would weaken the value of an eBay listing.

To counter these concerns, eBay as a matter of policy has declared, that while Yahoo will supply graphical, or "branded" advertising to all Ebay sites, the search ads will be limited.

World's largest Internet media company, Yahoo joins hands with E-Bay