Yahoo and eBay sign agreement to keep Microsoft and Google out

The agreement will see Yahoo! ads on eBay, and PayPal being used on Yahoo internet properties.

To take on the competition from Microsoft and Google, Yahoo and eBay have reached an agreement to boost their positions in the market. eBay is the world's leading e-commerce player and Yahoo is the world's largest internet media company.

The partnership is such that Yahoo will provide the exclusive graphical, branded advertising through eBay's auction site. Also, Yahoo will allow PayPal, the online payment system from eBay for its services to the customers. PayPal has become one of the standard payment mechanisms on the internet over the last half a decade. And Yahoo Publisher Network, though currently operating mostly for US web publishers, is growing to be a significant rival for Google’s Adsense. Recently, Microsoft too launched its AdCenter, which is a competitor for Google’s Adwords PPC.

Dell and Google had recently reached an agreement by which, the PCs manufactured by Dell will feature the Google applications including a Google toolbar. This partnership was made so as to resist the competition faced from Microsoft.

Google had made in-roads in both companies businesses and this strategic alliance is made to defend that threat from Google. The threat posed by Google was severe that the major Internet players are trying to go for strategic alliances rather than trying to do it alone.

The rumors about the deal was going on for quite some time in the Silicon valley and on Wall Street. The Yahoo- Ebay deal stops short of an outright merger though – so far it is limited to co-operation. This is seen as the efforts by major Internet players to consolidate their operations under one roof in view of the growing threats from Microsoft and Google.