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Thursday, May 25, 2006
Yahoo, eBay in Advertising Alliance

Yahoo and Web auctioneer eBay on Thursday said they agreed to form a broad alliance designed to boost their positions amid growing competition with Google and Microsoft.

Under the partnership between Yahoo, the world's largest Internet media company, and eBay, the biggest e-commerce player, Yahoo will be the exclusive provider of graphical, branded advertising throughout eBay's auction site.

In return, Yahoo has chosen EBay's online payment system PayPal to allow its own customers to pay for Yahoo services.

The alliance is a competitive response to the in-roads that Google's popular Web search system has made in both companies' businesses, which is forcing every major Internet player to consider joining forces instead of trying to go it alone.

Under the pact, which gives Yahoo access to eBay's vast base of online shoppers, the companies will begin to roll out their joint initiatives this year.

The partnership is another loss for Microsoft, which had been in talks in recent weeks with both Yahoo and eBay on strengthening their ties in order to fend off Google.

Late last year, Microsoft lost out in a bid to woo Google's biggest customer away, Time Warner's AOL, which instead renewed a search and advertising pact with Google.

Yahoo Web search features also will be offered through a co-branded version of a browser toolbar for eBay users, and the companies said they would explore developing "click-to-call" advertising technologies on their respective Web sites.

"Click-to-call" provides a link inside an advertisement that allows consumers to directly call the advertiser to pursue a transaction. EBay, through its acquisition last year of popular international Web-based telephone calling company Skype, and Yahoo, through its own Yahoo Messenger franchise, could link such services into click-to-call transactions.

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