Google! aborts! Yahoo! deal!

Advertisers and regulators win the day

By John Oates • Get more from this author

Posted in Financial News, 5th November 2008 16:13 GMT

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Google is abandoning attempts to push through its ad-sharing deal with Yahoo!

The two sides put the deal on hold while it was investigated by lawyers from the Department of Justice. The agreement would mean Google provided adverts for Yahoo! properties. Lawyers were concerned any tie-up would give Google an effective monopoly in online advertising. Several attempts were made to reassure the DoJ, including a committment that Yahoo! would continue to sell its own ads, or would install some kind of monitoring system to check prices were fair.

Reading between the lines it seems that it was unhappiness from Google's advertising clients as much as concerns from the DoJ that caused the deal to die.

Google's policy blog said: "However, after four months of review, including discussions of various possible changes to the agreement, it's clear that government regulators and some advertisers continue to have concerns about the agreement. Pressing ahead risked not only a protracted legal battle but also damage to relationships with valued partners ... But we're not going to let the prospect of a lengthy legal battle distract us from our core mission."

The post continues, somewhat bafflingly: "That would be like trying to drive down the road of innovation with the parking brake on." Quite.

The end of the deal leaves Yahoo! out in the cold, where it could again attract the attention of Microsoft.

Rebel shareholder Carl Icahn, now a board member at Yahoo!, is again mumbling about a resurrecting a search-only deal with Microsoft. Yahoo! shares are currently at $13.30, compared to the $33 a share Microsoft offered for the firm in May. ®

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