Yahoo! Inc. and EBay Inc. formed a partnership for online search and advertising as the two Internet companies seek to challenge the dominance of Google Inc.

The accord marries Yahoo, ranked No. 2 in online search, with EBay, the world’s largest Internet auctioneer, and will be implemented in the U.S. by 2007, the companies said today in a statement.

Yahoo gains access to EBay’s 75 million users for search and advertisements. EBay will use Yahoo’s ad and search software to help bolster revenue and keep customers from leaving for Google, which wants to parlay its position as the most-used search engine into businesses such as classified ads and online payments.

“They are getting together and partnering against a common enemy,” said Sasa Zorovic, an analyst at Oppenheimer & Co. in Boston who rates Yahoo stock “neutral” and said he doesn’t own it. “It’s clearly positive for Yahoo and negative for Google.”

Sunnyvale, California-based Yahoo will become the provider of graphic ads on EBay’s Web site. The companies will also collaborate on ways to increase the quality of Yahoo’s Web search results. EBay’s PayPal payment service will become Yahoo’s exclusive online payment option and will be integrated into the Yahoo Web site.

Yahoo’s search function and links will also appear as a co- branded toolbar with EBay. The companies will enter a testing phase for the next several months.

Posted: 05|25|06 at 5:51 pm. Filed under: Auction News.