Could advertising finally unite Yahoo and Microsoft?

New report says Microsoft and Yahoo may out differences aside his new search deal

Yahoo and Microsoft have met to discuss search and advertising partnerships in the face of Google’s dominance, it’s been reported.

According to AllThingsD, the meetings between chief executives of the search engines, Yahoo’s Carol Bartz and Microsoft’s Steve Ballmer, were preliminary and wide-ranging, focussing on what kind of commercial relationship Yahoo and Microsoft could have in the future.

Any acquisition deal similar to the $47 billion takeover attempt by Microsoft last year has been dismissed however. Both companies have declined to comment about the talks, but relations are said to have improved after the unsuccessful takeover created significant divisions between the two companies.

Search assets swap

Sources told AllThingsD the talks include a scenario in which the companies swap online advertising assets and deliver services to each other.

This could mean that Yahoo will take over all of Microsoft’s display and premium advertising business to sell along with its own, while Microsoft would run the search advertising business for the pair.

Sources close to Yahoo said the company wants to maintain control of its search business.

Ballmer told Wall Street analysts this February that such a partnership would be positive in the competition against search giant Google: “The fact of the matter is, these two guys [Microsoft and Yahoo] should somehow figure out how to get together and create more competition for this guy [Google].”

After the news circulated, Yahoo gained 7 per cent in the stock market; with IT research firm Gartner saying there is relief that Yahoo isn’t considering selling off its search service all together.