Yahoo Exposes Part Of Google Search Deal Terms In SEC Document

Both Reuters and CNET report on a Securities and Exchange Commission filing by Yahoo that contains many of the details of its paid search deal with Google. It’s a redacted version of the agreement the two companies signed. The omitted portions of the document are deemed confidential.

The agreement allows but does not require Yahoo to display Google ads on its properties or its partner sites. It also allows Yahoo to distribute Google ads through its RightMedia exchange.

As CNET points out, many of the privacy terms have been redacted, so it’s unclear what level of tracking or data sharing will go on between the companies. But in response to general privacy concerns (and heat from Congress on the matter), Yahoo announced last week that it would allow users to opt out of behavioral targeting on its site and network.

Google competitors such as Microsoft and interested others, such as Group M’s Rob Norman, have raised concerns that the Yahoo-Google paid search alliance will ultimately result in increased PPC prices. That’s an empirical question. And, assuming US Justice Department approval, we’ll get to see relatively soon whether these fears are well founded or not.

There are two outcomes here, it seems to me:

1. Google ads will have even greater reach
2. Yahoo will have more opportunities to serve ads against queries because of Google’s much larger volume of ads

Yahoo has made clear in the filing document, as well as in public statements, that it’s under no obligation to serve Google’s ads on any of its properties; there are no minimums and so on.

As a practical matter Yahoo will serve lots of Google ads to maximize revenues. The dangers are thus two-fold:

1. Does Yahoo continue to invest in Panama or its successor?
2. Will search marketers buy fewer ads directly from Yahoo because it becomes more “efficient” to simply buy from Google (and get Yahoo distribution as well)?

Yahoo has said that search is a highly strategic area for the company — one of the reasons given for not selling search to Microsoft — and that it will continue to invest so that it can sell both search and display in tandem. So perhaps the second scenario is the larger concern.

Again, however, none of this can be reliably predicted in the abstract. We’ll have to see what transpires in actuality.