By DPA,

San Francisco : An advertising alliance between Yahoo and Google was viewed as increasingly likely Friday after Google CEO Eric Schmidt said a two-week test had been a "brilliant" success.

Expanding the test, which involved Google serving ads on Yahoo's search pages, could increase Yahoo's revenues by over $1 billion a year, since Google's algorithms are 70 percent more successful at generating revenue-bearing click-throughs.

"We have had a brilliant test which was two weeks long," said Schmidt at the company's annual shareholder meeting Thursday. Asked to comment on the scuttling of Microsoft's bid for Yahoo he replied: "Obviously we are pleased that it's not going to happen."

Google founder Sergey Brin amplified on the close ties between the two companies, which were both founded by graduate students at Stanford University.

"We were a big partner of Yahoo a few years ago," Brin said. "It's great to be working with them again."

Brin implied that the companies were in advanced talks towards cementing an alliance.

Google and Yahoo started the test as a way to foil Microsoft's unsolicited bid for the company.