Yahoo and Google Advertising Deal

NEW YORK, June 12 (Reuters) - Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz) and arch rival Google Inc (GOOG.O: Quote, Profile, Research, Stock Buzz) said on Thursday they had entered a non-exclusive partnership on search advertising expected to add as much as $800 million in annual revenue.

Under the agreement, Yahoo can run ads supplied by Google alongside its own search results and on some of its websites in the United States and Canada. Yahoo will decide where the Google ads will run and which search terms it can use, Yahoo said in a statement.

The deal initially spans four years, with options to renew it up to a period of 10 years.

Yahoo said earlier on Thursday that it had failed to reach a deal with software maker Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz), largely because it did not accept a proposal by Microsoft to buy only its search business.

Yahoo said it expects the Google deal to generate an additional $250 million to $450 million operating cash flow within its first year. (Reporting by Michele Gershberg)

Source: Reuters