May 1, 2008 4:45 PM PDT

Report: Yahoo getting serious about Google ad deal

Posted by Stephen Shankland

Update 6:50 p.m. PT: I updated with Google's no-comment, too.

Yahoo could announce a deal within a week to carry Google search ads, potentially including a nonexclusive arrangement to allay antitrust concerns, The Wall Street Journal reported Thursday.

Yahoo and Google recently concluded a limited two-week test to see how well a partnership might work--and to get some bargaining leverage in Microsoft's attempt to acquire Yahoo.

Yahoo has been trying to fend off Microsoft's advances, arguing that it doesn't value the search pioneer highly enough. But the possible deal, as described by the Journal, could theoretically result in a tight tie with Microsoft, too.

As envisioned, the system would employ a real-time auction that would draw ads from Yahoo, Google, and potentially other companies including Microsoft. The ads would be selected on the basis of maximum revenue, which would be shared between Yahoo and the other search partner, the Journal said.

The argument is that opening the system to others could allay concerns that the partnership could be anticompetitive and therefore run afoul of antitrust regulators. Google already dominates the market for ads delivered alongside search results, and Yahoo is in second place.

Yahoo and Google declined to comment on the report.