Yahoo stops using Google in US

Yahoo! Inc, owner of the world's most-used group of Internet sites, stopped using search software provided by competitor Google Inc on its site for US users and offered a new search engine developed with its own software.

Yahoo replaced the Google search engine with one based on technology acquired in its purchase of Inktomi Corp 11 months ago, Jeff Weiner, a Yahoo senior vice president, said in an interview. Investors have said they expected the switch since Sunnyvale, California-based Yahoo agreed to buy Inktomi in December 2002.

Yahoo is ending its partnership with Google as the two companies compete for advertisers and Google prepares for an initial public offering of stock. Google's own Web site has surpassed Yahoo's as the most used for Web searches. Microsoft Corp has said it will also develop its own search engine for its MSN Internet sites as it tries to attract more advertisers.

"You don't want to be reliant on your largest competitor for anything," said Anthony Valencia, an analyst with TCW Group Inc in Los Angeles. Yahoo wants to develop "the best search product that there is," he said. TCW held 30.8 million Yahoo shares as of December.

Google, Yahoo and MSN all offer so-called sponsored search advertising, which allows businesses to pay for the right to have links to their Web sites come up at the top of Internet-search results on topics related to their businesses.

Sponsored search is the fastest growing form of advertising on the Internet, said James Friedland, an analyst with W.R. Hambrecht & Co in San Francisco, and sales of advertising on the Web are growing faster than in other media.

Losing Yahoo won't be financially significant for Google, said Jonathan Rosenberg, Google's vice president of product management. The company received a licensing fee but no advertising revenue from its contract with Yahoo.

Google, based in Mountain View, California, is planning to raise about US$4 billion in an IPO that could value the company at about US$12 billion, people familiar with its plans said. Rosenberg declined to comment.

Yahoo will offer the new search engine on its Web sites for non-US users, replacing Google, in the next several weeks, Weiner said.

Yahoo will offer so-called paid inclusions in its search results, spokeswoman Diana Lee said. That service lets businesses pay to ensure their Web sites are included among the billions of pages the search-engine scans to generate results.

Rosenberg criticized Yahoo for offering a paid inclusion service, which Google doesn't. Unlike sponsored search results, paid inclusions aren't labeled as advertisements.

"Google's search results will continue to be objective and will not allow the financial motive to enter into the determination of relevance," Rosenberg said.

Google, founded six years ago by Stanford graduate students Sergey Brin and Larry Page, only uses software to determine what Web sites to include in results, Rosenberg said. Yahoo's Lee said the paid inclusion service improves the results generated by the search engine.