Yahoo and Microsoft and AOL have just launched an allied assault against their common enemy – Google. 

The three internet giants are going to start selling ad inventory on each other’s sites in an attempt to knock Google off its top spot in display and search advertising. Google currently has revenues of $396 (13.3% of the market) compared to Yahoo’s $330m. 

At a dinner presentation in New York City on 13 September executives from the three companies briefed a group of web publishers and ad buyers about their plans.  

According to people who were at the presentation, Yahoo, Microsoft and AOL have agreed to sell each other’s class 2 display inventory (leaflet banner ads that the companies can’t sell on their own). 

Yahoo, AOL and Microsoft spokespeople have said in separate statements that the companies are looking into ways to develop partnerships with other firms in the internet advertising business.  

Principal analyst at ITIC, Laura DiDio, told the E-Commerce Times: “If you’re Microsoft or AOL or Yahoo you have to do something. In the search engine space, separately these are smaller animals at the watering hole. So they have to get together to have any force in the market. If you put the three of them together, maybe you have 25% marketshare. That's better if you're going up against Google with its 65% marketshare.”

The plan is due to start up by the end of 2011 and is likely to draw regulatory scrutiny, both for anti-competitive and privacy issues, coming as it does at a time when regulators have their eye on online advertising. 

Posted by

Neil Turner