Internet giants eBay and Yahoo announced Thursday a broad strategy partnership that allows them to outflank heavyweight rivals Google and Microsoft.

The multiyear alliance would help the two Silicon Valley companies to combine their strengths in an effort to shake up the Internet's competitive field, intensifying the battle for online business and advertising, said market observers.

The deal will allow Yahoo to be the sole provider of graphical advertising on eBay's site, while ebay's PayPal payment system will process sales made through Yahoo, which provides various shopping opportunities, subscriptions and auctions.

"It's a great deal for Yahoo users, eBay users, Yahoo merchants, Yahoo advertisers and eBay merchants," said Dan Rosensweig, Yahoo's chief operating officer. "It's a great opportunity for consumers to get access to the things they want on eBay and Yahoo."

He said that Yahoo's Messenger and eBay's Skype divisions will explore the possibility of creating a "click-to-call" service, in which consumers can phone an advertiser simply by clicking an ad.

According to Rosensweig, the two companies will spend the rest of the year working out the details of the new relationship with product rollouts expected in 2007.

EBay chief executive officer Meg Whitman said the agreement represents a great opportunity to benefit eBay communities and grow their businesses.

Yahoo and eBay are striving to bolster their partnership at a time when their stocks have been slumping as Internet search giant Google continues to expand its lead in search while offering new services that pose new threats.

However, the announcement contained no details on whether the two companies are investing in each other.

Google has invaded eBay's turf in recent months by offering a free classified listing service as well as a payment service, although the company said it has no plans to trample eBay, one of the largest advertisers on its network.

Meanwhile, Microsoft has vowed to invest heavily in the Internet next year to build a better online advertising platform, and it is dropping ads distributed through Yahoo.

Market statistics show that Google dominates Internet search with a 43.1 percent U.S. market share in April, compared with 28 percent for Yahoo and 12.9 percent for Microsoft's MSN.

Source: Xinhua