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Yahoo tests Google-powered search results, ads

Yahoo already has a 10-year deal to use Microsoft's Bing to power some search results. The software giant can't be happy Google is eyeing its territory.

Is Yahoo CEO Marissa Mayer thinking of signing a deal with her former employer? James Martin/CNET

Yahoo and Google are testing ways -- yet again -- to work together.

The companies confirmed to The New York Times that they're currently testing a partnership that will see Google supply search results and search ads to Yahoo. The discovery was first reported Wednesday by Aaron Wall of SEO Book, a company that specializes in search engine optimization. At this point, the arrangement is only a test and may not translate to an actual deal.

"As we work to create the absolute best experiences for Yahoo users, from time to time, we run small tests with a variety of partners including search providers," said a Yahoo spokeswoman on Thursday. "There is nothing further to share at this time."

Google did not immediately respond to a request for comment.

Google is the world's most popular search engine, with nearly 71 percent market share worldwide, according to data from NetMarketShare. Yahoo, lead by former Google executive Marissa Mayer, is a distant third at 9.6 percent share. Microsoft's Bing search engine is stuck between the two with a 10 percent share. In the US, Google has a 64.4 percent share of the search market, followed by Microsoft with a 20.1 percent and Yahoo with 12.7 percent, according to research firm ComScore.

In 2009, Microsoft inked a 10-year pact with Yahoo to power its search results. The deal, which also included a revenue-sharing agreement with search ads, paved the way for Microsoft's fledgling Bing search engine to gain significant market share. The idea that Google is now potentially moving in on Microsoft's territory, however, cannot sit well with the Redmond, Washington-based tech giant. What's worse, there is likely little that the "mobile-first, cloud-first" company can do about it.

Microsoft did not immediately respond to a request for comment.

In April, Microsoft and Yahoo announced an amendment to their earlier agreement that provided Yahoo with more "flexibility to enhance the search experience" across mobile and desktop devices. A key component in that modification is the ability for Yahoo to partner with other companies to power its search platform, as long as 51 percent of all search results are still delivered by Microsoft's Bing.

Microsoft has, in part, claimed its share of the search engine market through partnerships. In addition to Yahoo, Microsoft's Bing search platform powers the Web search built into the Spotlight app in Apple's iOS and OS X operating systems. Microsoft also announced last week that it inked a deal with AOL to power its search services as of January 1.

Still, Microsoft has lost some critical deals, including one with Facebook in December. The world's largest social network said in December that it had ended its deal with Bing to provide Web results to focus instead on "helping people find what's been shared with them" through the Facebook search box.

While the Bing-Yahoo pact won't be going away, the amended deal paves the way for Google to eat up a potentially significant chunk of Yahoo's search and ads, if they agree to terms.

Actually agreeing to terms, however, could be the sticking point for Google and Yahoo. The companies in 2008 attempted to ink a search-ad deal that would have allowed Google to place its ads on Yahoo search results. After months of regulatory inquiry and complaints from competitors, including Microsoft, the deal was scuttled and Google and Yahoo parted ways.

Still, the landscape has changed in the last several years and Yahoo no longer holds as large a slice of the search and online ad space. If a deal is signed between the companies, it's possible it could overcome regulatory hurdles, especially in light of the ongoing deal with Microsoft.