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On Thursday, 12th of July 2008, Google and Yahoo! announced a non-exclusive advertising deal that include:

• Yahoo! use Google AdSense™ for search and content programs on their U.S. and Canadian web properties
• Yahoo! and Google instant messaging programs will become more unified, which means users of those programs will be able to communicate with each other which was not available before
• Yahoo! may still serve their ads on their U.S. and Canadian web properties and current publisher partner sites
• Yahoo! continues to operate search engine and all other services, including advertising services

“This commercial agreement provides Yahoo! with the opportunity to deliver more relevant ads to users and provide advertisers and publishers with better advertising technology to help them succeed in their own businesses,” said Eric Schmidt, Chairman and CEO of Google. “This agreement will preserve the competitive and dynamic online advertising space.”

The results of the agreement:

• Yahoo! gains access to Google advertising technology
• advertisers may reach more potential customers through Yahoo! web pages
• Yahoo! may choose how many ads they show from Google AdSense™ program
• Yahoo! may enter other agreements as it is not an exclusive deal
• the agreement is up to 10 years; a 4-year initial term and two 3-year renewals at Yahoo!’s option
• Google and Yahoo! voluntarily agreed to wait up to 3,5 months before implementing the deal to give time to the U.S. Department of Justice time to review the arrangement if needed (probably there will be some kind of investigation)
  
• financial terms of the ad deal between the two companies are kept confidential

Google press release and Google blog post.

Yahoo! press release and Yahoo! blog post.