Google sees benefits in Yahoo "experiment"

SEOUL (Reuters) - Internet service leader Google Inc (GOOG.O) believes its recent advertising deal with Yahoo Inc (YHOO.O) will be beneficial as Yahoo tries to become more profitable, a key Google executive said on Wednesday.

Vinton Cerf, vice president and chief Internet evangelist at Google, also said the ongoing energy price surge and economic slowdown may have a positive impact on the Internet business as people try to cut fuel use and improve efficiency.

"In the case of Yahoo, the company believes that it will be beneficial to assist Yahoo with its experiment," Cerf told a press event on the sidelines of the OECD Ministerial Meeting on the Future of the Internet Economy.

"That's all this is: a non-exclusive arrangement to allow Yahoo to use at their discretion some of our advertising capability."

Archrivals Google and Yahoo Inc agreed last week on an advertising partnership under which Yahoo let Google put search ads on its site in a deal Yahoo called an $800 million (400 million pounds) annual revenue opportunity.

At the same time, Yahoo ended months of on-again, off-again merger talks with Microsoft Corp (MSFT.O), a big blow to Microsoft's plan to build a strong footing in online advertising.

Billionaire financier Carl Icahn, who launched a proxy battle in May to replace the board of Yahoo in the wake of its failed deal to be acquired by Microsoft, said on Sunday Yahoo's deal with Google "might have some merit".

Google and Yahoo are ranked No. 1 and No. 2 in search, respectively.

Asked about Microsoft's move to enlist support against the Google-Yahoo collaboration, Cerf said: "We simply say we're trying to encourage competition in the environment and we'll take steps to assist where that seems to be possible."