Google, Yahoo strike ad deal

Just hours after saying it ended talks with Microsoft, Yahoo announced that it will start running advertising from Google alongside Yahoo search results.

Yahoo expects the deal, which has a 10-year term, to generate US$250 million to US$450 million in operating cash flow during the first 12 months.

Although Yahoo and Google say that they aren't required to receive regulatory approval for the deal, they will delay implementation for three-and-a-half months while the U.S. Department of Justice reviews the arrangement, Yahoo said in a statement. Various groups ranging from farmers to Microsoft have expressed concern about such a deal.

The announcement comes after Yahoo spurned an acquisition offer from Microsoft. Yahoo's board now faces a proposal by billionaire investor Carl Icahn, who hopes to replace the entire board in order to force a deal with Microsoft.

Yahoo and Google expect to reveal additional details of the agreement during a conference call on Thursday.

More to come.

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