Yahoo has announced a partnership with rival Google to start testing Google-generated ads in its website during a period of two weeks. A starting date was not specified.

The test will involve placing Google search ads to about 3% of the queries made in the U.S. through Yahoo’s search engine. After the two-week trial, Yahoo will evaluate whether it generates more revenue by outsourcing ads from Google or through its own ad sales system.

Yahoo’s move is clearly an attempt to show Microsoft that it has other options besides taking its initial bid of $42 billion (or $31a share). Over the weekend, Microsoft set a three-week deadline for Yahoo to begin negotiations, a demand Yahoo declined by restating its contention the offer undervalues the company.

Microsoft fired back saying that a deal between Yahoo and Google would make the search market less competitive.

Indeed, according to ComScore’s MediaMetrix data, Yahoo’s market share continues to drop and accounts to 21.6% in February. In the same way, Microsoft’s share is also down to 9.6% for the month of February. In the meantime, Google’s share has grown to 59.2% for the same time period. If a Google-Yahoo alliance occurred, it would represent a total of about 81% of the total search market.

Sony Pictures Television said it will become the first Hollywood studio to launch a movie network on cellphones in the U.S.

The company has signed deals with AT&T and MediaFLO to start offering movies from several labels as early as May.

The channel, called PIX, will contain full-length movies that have been already broadcasted on TV, theatres or DVDs such as “Karate Kid,” “Ghostbusters” or “Resident Evil.”

The service will be ad-supported and not be available on demand although Sony could eventually convert PIX to an on demand model or take it online.

AT&T has not yet disclosed a price for the new mobile TV package.

Hulu, the long-awaited online video joint venture between NBC and Fox, went live today offering hundreds of free TV shows and movies to anyone on the Internet.

The site displays ad-supported films from NBC, Fox as well as over 50 media companies including Sony Pictures, Warner Bros. and MGM.

Hulu’s ambitious and never-ending mission is to help you find and enjoy the world’s premium content when, where and how you want it. We hope to provide you with the web’s most comprehensive selection from more than 50 content providers including FOX, NBC, MGM, Sony Pictures Television, Warner Bros., Lionsgate, and more to deliver premium programming across all genres and formats, television shows, feature films, and clips. Watch full-length episodes of current primetime TV shows such as The Simpsons and The Office the morning after they air, classics like Miami Vice and Buffy the Vampire Slayer, and clips from Saturday Night Live, Nip/Tuck, and others. Hulu also offers full-length feature films like The Usual Suspects, Ice Age, Three Amigos!, and The Big Lebowski as well as clips from films such as Napoleon Dynamite, The 40 Year Old Virgin, Devil Wears Prada and many more. Hulu is free and ad-supported — available anytime in the U.S. [Hulu]

Hulu has been in beta version since October but has been slowly inviting users to join the site. Unlike competitor YouTube, Hulu offers high-quality professional video content which, presumably, will be more attractive to advertisers.

Currently, Hulu is running traditional 30-second ads in the long-form video. However, for certain shows the company expects to let users choose from an array of commercials in advance of a video choice. Some viewers will also be given the opportunity to watch a two-minute film preview before a TV show, and then skip all the other advertising breaks. Because viewers choose the ads they want to see, they will potentially have more interest in the products being advertised.

Hulu’s implementation of new advertising formats in combination with rich high-quality content could be the alternative major marketers have been waiting for.

Yahoo has announced the acquisition of online advertising network BlueLithium for $300 million in cash.

Blue Lithium specializes in selling performance-based display ads across a network of Web sites. Like search-related text advertising, performance banners let advertisers pay for exposure to customers only when people respond to the ad, whether it’s by agreeing to receive more information or by taking some action. The privately held company, which also sells behavioral targeted advertisiments, is ranked the fifth largest ad network in the United States and second largest in the United Kingdom with 145 million unique visitors per month.

The acquisition of BlueLithium enables Yahoo! to accelerate its advertising, product, and engineering roadmaps, and gives the company increased capabilities to sell and measure performance-based campaigns both on and off the Yahoo! network.

BlueLithium and Yahoo! share a common goal of providing both advertisers and publishers with high quality inventory and the essential targeting and analytical tools that are necessary to reach the right consumers at the right times. The addition of BlueLithium is the logical next step in creating the largest and most effective online ad network globally, which also includes inventory on Yahoo!’s owned and operated properties, the Yahoo! Publisher Network, and the Right Media Exchange. We believe that together Yahoo! and BlueLithium will help drive the next evolution of the online advertising industry. [BlueLithium]

The deal comes five months after Google bought online ad giant DoubleClick for $3.1 billion and less than four after Microsoft acquired aQuantive for $6.1 billion.