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Yahoo! signs advertising deal with Google

Yahoo! to trial Google's AdSense software to strengthen position in online advertising market

Yahoo! has thumbed its nose at Microsoft, with the announcement of a new agreement with arch rival Google on online advertising.

The online giant, which is facing a possible hostile takeover from Microsoft, will launch a trial of Google's AdSense for search service, which will see Google adverts appear as part of searches on Yahoo!

In a direct reference to a letter sent to Microsoft earlier in the week rejecting its takeover bid, the latest announcement was accompanied by a press release which stated: "Yahoo!'s board of directors is exploring strategic alternatives to maximize stockholder value, including exploration of potential commercial business arrangements."

Yahoo! had previously tried to arrange a number of deals with Google after it initially rejected Microsoft's offer.

No start date was given for the two-week trial of AdSense, which will only apply to searches from the US, for a maximum 3% of search queries.