Yahoo! Scores a Sweet Deal

What do you get if you play the Yahoo! (Nasdaq: YHOO  ) Yodel together with 50 million tweeting birds? Besides a thundering headache, you'd get a freshly minted business partnership.

Like Google (Nasdaq: GOOG  ) and Microsoft (Nasdaq: MSFT  ) before it, Yahoo! has formed a partnership with microblogging titan Twitter. Relevant tweets will show up in Yahoo!'s search results from now on, and later this year you'll find new ways of reading and posting those 140-character messages across Yahoo! services such as Yahoo! Mail, Finance, and Sports.

For Twitter, Yahoo! completes the trifecta of leading online search partners. These deals raise public awareness of the Twitter service, which should in turn keep the volume of tweets growing and hence make the service more useful and valuable. Google and Microsoft reportedly paid Twitter $25 million each for their search-focused agreements; Yahoo! and Twitter aren't sharing any details about financial arrangements, but this contract should land somewhere in the same neighborhood.

For Yahoo!, this partnership was almost inevitable. In order to stay current and fresh, the yodelers couldn't very well let everyone else run away with real-time information feeds from Twitter. Whether it proves a temporary flash in the pan or a trend with real staying power, Twitter is a hot topic right now, and nobody wants to look like a Luddite. IAC/InterActive (Nasdaq: IACI  ) should get its Ask.com search engine on the bandwagon pronto, unless it wants to be laughed at by the cool kids.

Under CEO Carol Bartz, Yahoo! is rediscovering its roots, which always reached deep down into the rich soil of loyal users. Google is the master of computerized algorithms, but Yahoo! was built on connecting people. Building Twitter and Facebook into the Yahoo! experience simply makes sense, and it capitalizes on the company's core strengths. This is what AOL (NYSE: AOL  ) could have been, but never was: a massive and global social engine stuffed into an information-harvesting vehicle, with humans at the wheel.

Ms. Bartz should be able to drive this contraption farther and faster than you might think over the next few years. Yahoo! carries a lowly two-star CAPS rating out of five, and I think it deserves much better. Why not head on over to CAPS and give Yahoo! a thumbs-up rating today? Justice must be served. (And if you disagree, you could always turn your thumb down and send Yahoo! toward the one-star basement instead.)