Well as it turns out there was no merger. Instead of getting hitched, Yahoo! and eBay have decided to live together with a distinct delineation of what is ‘his’ and ‘hers’. They have established a two way exclusive partnership with each other without combining assets.

“Under the partnership between Yahoo, the world’s largest Internet media company, and eBay, the biggest e-commerce player, Yahoo will be the exclusive provider of graphical, branded advertising throughout EBay’s auction site.

In return, Yahoo has chosen EBay’s online payment system PayPal to allow its own customers to pay for Yahoo services.” see Yahoo, eBay form far-reaching alliance - Yahoo! News

On the surface, there appears to be an immediate benefit for Yahoo, as its ‘Small business’ arm will now be able to offer its customers access to PayPal’s very cost effect Merchant services plan. Similarly, eBay can benefit from an improved revenue stream from advertising on its popular site.

A full marriage would pair up the Skype and Yahoo! Messenger Assets and possibly blur the lines between Yahoo! Shopping and eBay sales and stores.

It will be interesting to see how this couple fairs in their new cohabitation experiment. If they can get along without fighting too much, we might yet see a Yahoo!-Bay.

Note. The author of this article owns shares of Yahoo!.

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A 56 page JP Morgan report and analysis on potential merger scenario puts a Yahoo + Ebay Merger as a higher likelihood over something like a Yahoo + Microsoft or Microsoft + Ebay Merger. The report leaves Google as the outsider continuing to go it alone leaving Yahoo!, Microsoft & Ebay to consider how to partner/merger together to fend off market share advances from Google.

Note. The author of this quick excerpt owns shares of Microsoft and Yahoo!.

New Zealand’s source for technology news on Stuff.co.nz: Big internet deal being rumoured

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