Microsoft continued its letter writing campaign to acquire Yahoo this afternoon, following news that the former will be testing Google advertising in search results as an alternative to the software giant’s acquisition offer. The company issued a brief statement reading as follows:
“Any definitive agreement between Yahoo! and Google would consolidate over 90% of the search advertising market in Google’s hands. This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo! We will assess closely all of our options. Our proposal remains the only alternative put forward that offers Yahoo! shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers.”
As I noted earlier, at best, Yahoo can expect perhaps a 30% increase in search engine revenue as a result of using Google’s ad serving. Once Google takes their cut, that number would of course be smaller, making the long-term prospects of the deal a lot less attractive to Yahoo shareholders than Microsoft’s offer.