In a move aimed at appeasing riotous stockholders, Yahoo has run into the arms of its main rival, Google.

Google announced that it has reached an agreement that gives Yahoo the ability to use Google's search and contextual advertising technology through its AdSense for Search and AdSense for Content advertising programs.

Under the agreement, Yahoo has the option to display Google ads alongside its own natural search results in the US and Canada.

In addition, Yahoo can serve contextually targeted ads on its US and Canadian web properties as well as on its current publisher partner sites. Yahoo will continue to operate its own search engine, web properties and advertising services.

Yahoo and Google also agreed to enable interoperability between their respective instant messaging services bringing easier and broader communication to users.

"This commercial agreement provides Yahoo with the opportunity to deliver more relevant ads to users and provide advertisers and publishers with better advertising technology to help them succeed in their own businesses," said Eric Schmidt, CEO of Google.

"This agreement will preserve the competitive and dynamic online advertising space."

As a result of the agreement, Yahoo will be able to complement its own advertising program with Google's advertising technology. As a result, advertisers will be able to better reach consumers, and Yahoo and its current publisher partners can generate more revenue.

Yahoo can use Google's advertising technology on as many or as few of its search result and content pages as it chooses.

This non-exclusive agreement allows Yahoo to enter into similar agreements with other advertising providers.

Although Google and Yahoo are not required to receive regulatory approval of the arrangement before implementing it, the companies have voluntarily agreed to delay implementation for up to three and a half months to give the US Department of Justice time to review the arrangement.

The agreement between Yahoo and Google comes as Yahoo faces increasing pressure from its shareholders over its alleged bungling of a $50-billion takeover offer from Microsoft.

Yahoo is obviously hoping that this new agreement will bolster its stock ahead of its annual shareholders meeting on 1 August, where its current board will face a proxy battle for control of the company.