It seems like Yahoo is leaning towards Google after the deal talks with Microsoft failed. Today most of the news sites like New York Times, PCWorld, and Bloomberg reported that Yahoo agreed to have Google ads in its search results. It’s more like Google’s Adsense program for Search. The deal applies to the U.S. and Canada only.

The terms and conditions of Adsense for Yahoo will vary significantly to facilitate the big deal. Yahoo emphasized the flexible terms of the deal. They will be able to choose the search term queries for which Google's advertisements will appear, and also the pages on which they appear. Also Yahoo retained the rights to cut deals with other companies and can also keep selling ads from its own Panama advertising platform.

As the Adsense program the Advertisers will pay Google for its ads that appear by Yahoo searches, and Google will then pay a portion of the revenue to Yahoo. Only thing is the percentage share will be higher than any of its Adsense publishers till now. Rivals joining together are going to be a big loss for Microsoft. Even now they are not able to digest the success of Google and able to compete in the area of online advertising. Now Yahoo joining hands with Google is like fire inside belly for Microsoft.

As per the Google Press Release, they are also agreed to enable interoperability between their respective instant messaging services bringing easier and broader communication to users. That means from Yahoo! messenger you can chat with the friends in GTalk and vice versa. Thanks to Amit Agarwal for highlighting this point from the Google PR.

Related Links:

New York Times: Ad Accord for Yahoo and Google

PCWorld: Google, Yahoo Strike Ad Deal

Bloomberg: Yahoo Strikes Deal with Google as Microsoft Talks End