- 12 Jun 08, 23:41 GMT
The Yahoo soap opera seems to get a new plotline every week and is in danger of moving from melodrama to farce. To recap for latecomers to this romcom:
"Previously on "The Search for Love", Microsoft fancied Yahoo, which played hard to get, and flirted with Google. Microsoft walked away in a huff, only for Yahoo to say it had been hasty, and might well have walked up the aisle if only its suitor had been a little more generous. Then Microsoft said it might be interested again after all, although only in a more "open" relationship."
But tonight came sad news for friends of the star-crossed lovers. "Yahoo and Microsoft no longer speaking" was the headline on one technology blog. Yahoo put out a statementrevealing that there had been an irretrievable breakdown. Microsoft had said it was never ever going to marry Yahoo - and Yahoo had no interest in a more limited relationship, involving handing over search because that "would leave the company without an independent search business that it views as critical to its strategic future."
Instead, though, Yahoo appears to be throwing itself at Google. In the latest enthralling episode, just hours after the Microsoft break-up, the two firms announced a new advertising partnership. Jerry Yang's company explained: "The agreement enables Yahoo! to run ads supplied by Google alongside Yahoo!'s search results and on some of its web properties in the United States and Canada. The agreement is non-exclusive, giving Yahoo! the ability to display paid search results from Google, other third parties, and Yahoo!'s own Panama marketplace." So, let's be clear, just because we're getting into bed with Google, it doesn't mean we're not free to play the field.
I'm not so sure that the competition watchdogs are going to see it that way. Alarm bells were already ringing on Capitol Hill over Yahoo's "limited" trial in April of Google's technology, with talk of congressional hearings. And the Microsofties are keener than ever to paint themselves as minnows in the world of search advertising faced with Google's 800lb gorilla. "We only have 4% of the search market, so we just don't compete," said one.
Harsh words too tonight from sources at Microsoft about why they lost all interest in buying Yahoo. "It's an underperforming business whose staff are all heading for the hills," was the gist of the message from Redmond.
Wall Street seems to agree. Yahoo's shares fell more than 10% after the collapse of the Microsoft talks - though the market closed before the statement about the Google deal. And it's hard to imagine that advertisers will see the Yahoo/Google love-in as a happy ending. It's corporate lawyers who will be sending flowers to the couple - they can expect plenty of business as regulators around the world start asking searching questions about competition in online advertising. Tune in soon for another episode, but be warned, there could be tears before bedtime.
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