MUMBAI: Internet powerhouses Yahoo! and eBay today announced a multi-year strategic partnership aimed at taking on the likes of search engine leader Google and Bill Gates' software giant Microsoft.

A joint statement issued by the two companies says the partnership is "designed to mutually benefit both companies by better serving their user, merchant, and advertising communities in the US. The agreement consists of four major components in the areas of search and graphical advertising, online payments, a co-branded toolbar, and the opportunity to explore 'click-to-call' functionality."

Yahoo! and eBay will begin to roll out the initiatives outlined in the agreement this year. This will include a testing phase that will take place over the next several months, with a plan to achieve full implementation in 2007.

According to the deal, Yahoo will be the exclusive third-party provider of all graphic ads throughout eBay's auction site. Yahoo! and eBay have also agreed to collaborate on ways to increase the quality and comprehensiveness of Yahoo! Web search results for eBay.com.

Yahoo has also chosen eBay's online payment system PayPal to allow its own customers to pay for Yahoo Web services. PayPal will be integrated and promoted as Yahoo!'s payment solution to Yahoo!'s merchants and publishers, which includes the Yahoo! Publisher Network, Yahoo! Search Marketing, Yahoo! Merchant Solutions and other small business services.

"Our consumers will benefit from the combination of Yahoo! and eBay's leading technology and services, providing them with one of the best online experiences," said Yahoo! chairman and CEO Terry Semel. According to Semel, the partnership offers an opportunity to extend the two companies' sponsored search and graphical advertising reach on the Web," he added.

Said Meg Whitman, eBay president and CEO, "Working together, we can create more exposure for our properties, which in turn makes them more valuable to our users."
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