Yahoo! and eBay's strategic deal makes sense for both partners as Google's empire-building steadily encroaches on eBay's territory and Yahoo! looks to bolster its search-related advertising business.

Yahoo! operates the world's most trafficked website, with over 400 million users, and ranks second in the booming search advertising market behind Google. The Microsoft chairman, Bill Gates, recently announced an extra $2bn (£1.06bn) investment in its new businesses, largely MSN and Windows Live, aimed at pegging back Google.

The software giant is also in the process of rolling out its next generation advertising delivery platform, called AdCenter, to close the gap on its rivals.

Meanwhile eBay boasts nearly 200 million users and owns Paypal, the biggest online payment system, and voice over internet protocol service Skype.

The online auctioneer has traditionally had a strong relationship with Google, with the search company directing millions of users to eBay. However, Google has recently become a major threat as it develops new products that have begun to encroach on eBay's territory.

Last year Google launched a service called Google Base which, like eBay , allows web users to meet online to buy and sell goods and services. The service has already caught on, with around 45m listings. Crucially, unlike eBay, Google Base customers pay nothing to list their goods.

Google has also launched a payment service to handle credit card processing for customers, like eBay's PayPal. There are even rumours of an online currency in development, perhaps something like the ill-fated Beenz.

The search giant also has Google Talk, a service allowing users to talk to one another over the internet, similar to eBay's Skype product.

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