Yahoo Inc. may be close to announcing a decision to carry out its web search advertising from Google Inc., according to a report released Wednesday.
The Wall Street Journal, citing people familiar with the matter, said the discussion was part of Yahoo's pursuit of alternatives to Microsoft Corp's $44.6 billion unsolicited takeover bid.
The deal is part of a test that could lead to a broader partnership between the two companies, which involves tracking a small percentage of Sunnyvale-based Yahoo Web search queries.
Yahoo and Mountain View-based Google will then evaluate the revenue which a larger outsourcing arrangement may provide for both companies.
Google's web search technology garners a higher revenue stream than Yahoo does, which is why analysts agree that if Yahoo outsources them, it will increase their advertising cash flow. If the deal goes through, Yahoo will most likely keep the majority of the revenue, while Google will receive the rest as a commission.
Yahoo share price ended 0.3 percent higher, while Google was down $3.62, or 0.78 percent.