The Yahoo/Google Ad Deal Is Off

By shanesnow
Published on November 5, 2008

Google announced today that it will be discontinuing the paid search advertising deal that has been brewing between the search giant and one of its chief competitors, Yahoo, for the past several months. The abandonment of this partnership could mean the loss of millions of dollars in potential revenue.

Antitrust investigations by the U.S. government are cited as responsible for giving Google “cold feet” even after the magnitude of the partnership agreement was scaled back significantly last week.

Chief legal officer at Google, David Drummond, wrote, “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.”

Now that the agreement is off, it appears that the U.S. government will be discontinuing its antitrust investigation.

Assistant Attorney General, Thomas O. Barnett, said to the New York Times, “The companies’ decision to abandon their agreement eliminates the competitive concerns identified during our investigation and eliminates the need to file an enforcement action . . . The arrangement likely would have denied consumers the benefits of competition — lower prices, better service and greater innovation.”

Yahoo’s stock shares are trading at around $14 today, and there is speculation that in light of these events a similar offer from Microsoft’s previous one of a buyout for $33/share may again be brought to the table.

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