Google, Yahoo! and Microsoft are readying themselves for a Christmas battle for the internet advertising market, it has been suggested.

Firstly Google has revealed details of a scheme in which its Checkout purchasing system will offer two frequent flyer miles for each dollar spent by its US users, according to the New York Times reports.

Commenting on Google’s current market position, Henry Blodget of the Silicon Alley Insider, said: "Google has locked up the number one spot in the sector, and the market won’t support more than three competitors."

Yahoo!, on the other hand suffered a pre-Christmas setback earlier this week as it reported system problems on Monday which is traditionally a big day for festive shoppers.

However, it is thought that it may have been this influx of traffic that caused the problems and that the weight of the post-Thanksgiving web traffic had been underestimated.

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