Google executives convened an emergency meeting last night to discuss the implications of a possible revived deal between Yahoo! and Microsoft.

The pair are understood to be negotiating a deal concerning the control of advertisements that are displayed next to internet search results, a market that is dominated by Google. The joint venture could be sealed in the next few days.

Speaking at the Google Zeitgeist conference in Hertfordshire, hosted by the internet company’s founders Larry Page and Sergey Brin, Eric Schmidt, the chief executive, said: “After this press conference the three of us will meet and decide what our response is.”

The three companies are fighting over online advertising, which is thought to be worth about $40 billion a year and is expected to double by 2010.

Over the past few days, Microsoft contacted Yahoo! about acquiring part of the internet company, but said that it had not ruled out a full takeover for the whole group. It is thought that Microsoft also wants to take a minority, passive stake in Yahoo!.

The renewed talks were triggered by Carl Icahn, the billionaire activist shareholder, who last week threatened to try to dismisss ten of Yahoo!’s directors and replace them with his own nominated executives. Mr Icahn is trying to use his 4 per cent shareholding in Yahoo! to force it to reopen talks with Microsoft.

At the end of January, Microsoft approached Yahoo! with a hostile takeover approach valuing the group at more than $40 billion. Two weeks ago, it raised its offer to $47.5 billion. Both were rejected by Yahoo! as too low.

Mr Brin said yesterday that he would give Jerry Yang, the chief executive of Yahoo!, refuge within Google if investors were to push him out. Mr Schmidt and Google’s co-founders added that they believed that Google was recession-resilient, saying that search advertising was attractive to advertisers. Mr Brin added that Google had not yet ruled out a tie-up with Yahoo! Google recently ran a small trial of its technology on Yahoo!’s site in the US which was widely seen as offering Mr Yang a way to escape a Microsoft takeover.

Yahoo! failed to return calls yesterday and Microsoft could not be reached. Mr Icahn failed to return calls.

— Google yesterday launched a new health service which allows online users to compile their medical records and suggests relevant websites such as local doctors. The service is password protected and can be found by clicking on to http://www.google.com/health/.

Online numbers

$40bn
Value of the online advertising market

$80bn
Estimated value of the online advertising market in 2010

$47.5bn
Value of Microsoft’s rejected offer for Yahoo!

Source: Times archive

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