Pay-per-click pioneer Overture, now owned by Yahoo, has long contended that other pay-per-click services including Google AdWords infringe its patents. Rather than allow the legal dispute to drag out any longer, the two parties have come to a settlement whereby Google has arranged to license technology from Yahoo in exchange for granting Yahoo additional shares of Google stock.
While they may appear to be fierce competitors on the surface, since both Yahoo and Google own a considerable share of their own traffic, they are bound to be co-leaders in the online advertising space for some time to come. Along with that equilibrium, and the fact that Yahoo owns shares in Google, the two companies' interests are intertwined to a fair degree. There are common goals and "coopetition" in this space as in other technology niches; it's not necessarily all-out competition.
The settlement may now put pressure on other PPC providers such as LookSmart and Findwhat to pay a licensing fee to Yahoo. If Google wasn't interested in fighting this in court, it seems likely that the latter two might be forced to settle as well, and that could be costly.
Posted by Andrew Goodman
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