Yahoo and eBay Form Partnership

Seattle P.I.: 

Internet powerhouses Yahoo and eBay are joining forces in an alliance that appears aimed at thwarting the recent expansions of online search engine leader Google and Microsoft.

Shares of both companies rose after the news.

Under the multiyear partnership announced Thursday, the Silicon Valley companies will draw upon each other’s strengths in online advertising, payments and communications so they can connect with even more Web surfers than they already do.

Sunnyvale, Calif.-based Yahoo Inc. operates the world’s most trafficked Web site with 402 million users and ranks second in the lucrative search advertising market behind Google.

But the deal between Yahoo Inc. and eBay Inc. seems likely to shift the competitive landscape.

Yahoo will become the exclusive provider of graphical advertising throughout eBay’s Web site and will provide some search-generated ads, as well. Yahoo’s brand and search engine will also be blended into an eBay toolbar that has been downloaded by 4 million users so far.

Ebay’s PayPal service will become the preferred payment provider for purchases made on Yahoo’s site, which provides a wide array of shopping, auctions and subscription services.

The Skype service will be used to build another marketing vehicle that will allow advertisers to connect with prospective customers on the phone instead of through their Web sites.