Yahoo-Google Alliance And Internet History

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The widely reported Yahoo-Google alliance appears to be a certain reality.  Yahoo has indicated that the alliance will bring Yahoo an additional $800 million in revenue in the first 12 months of the deal.  This is a nice number for sure.  Yahoo is happy with this deal.  It will show investors that there is greater growth from search for Yahoo.

I think there is a big downside to this deal.  During the "Search Era" we have witnessed numerous deals in which one search company has allowed another search company to take over the selling of inventory.  While I am not 100 percent sure, I believe that in every case where one of these deals has taken place the company that gives up its inventory ultimately ends up with a lower valuation.  In other words, while Yahoo will gain in revenue, it will forever be beholden to Google and will thus lose lustre and value to investors.

Yahoo will grow.  I doubt it will ever attain a vibrant stock valuation because of this deal. 

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1 Comments

aaron wall said:

I think Ask.com went up in value through outsourcing search to Google. Other than them though it has been a short term gain at the expense of longterm value.

Worse yet, Google already does price fixing on AdWords ads. What more when they control Yahoo!'s share too?

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