Yahoo and Ebay in alliance against Google

Sunnyvale (CA) - Google’s dominance in the online advertising market and its rapid expansion in more business areas may have triggered an alliance between Yahoo and Ebay : The two companies today announced that they will work together in online advertising, online payments, a co-branded toolbar as well as VoIP-supported advertising features.

The collaboration is part of a "multi-year strategic partnership" that will aim to reach more users, merchants and advertising customers. According to a statement, Yahoo and Ebay will begin to roll out new products that will span across both networks later this year. After the completion of a beta phase, which is expected to last "several months," the companies expect to have implemented all features sometime in 2007.

Specifically, Yahoo and Ebay will be sharing some of their core assets to increase the reach of both networks. For example, Yahoo said it will become the exclusive third-party provider of all graphical advertisements throughout the Ebay site, Ebay will be providing "more up-to-date listings" from its online auctions to Yahoo, Yahoo will improve Ebay’s search functionality and both firms will offer a co-branded "Ebay toolbar" to their users.

Yahoo will be adopting Ebay’s Paypal online payment system - allowing customers to pay for Yahoo services from bank accounts, credit cards or balances associated with their Paypal accounts. Yahoo mentioned that the service will become the "exclusive third-party provider of its online wallet" and will be "deeply integrated on the Yahoo site."

The alliance also unveils some of Ebay’s ideas how to capitalize on its multi-billion-dollar investment into Skype. Yahoo will be assisting Ebay to "explore developing and deploying ’click-to-call’ advertising technologies." According to Yahoo, Click-to-call could become a new premium advertising feature : A link included inside an advertisement will enable consumers to directly call that advertiser to buy a product.

Investors reacted positively to the news and sent up Yahoo’s stock 2.7% up to $32.66 and Ebay’s stock up 7% to $32.31 in early Thursday trading.