Google has Yahoo get out clause

 

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Posted on 16 Jun 2008 at 08:48

Securities and Exchange Commission filings reveal Google has a number of get out clauses in its ads deal with Yahoo.

Principal among these is a "kill fee" which would see Yahoo having to pay Google $250 million, should ownership of the company change in the next two years, or 50% of voting rights shift to a third party.

Google also has the option to abandon the deal after 10 months should revenues fall below $83 million over a four-month period.

The filing is also clearly wary of potential antitrust problems, explicitly noting that under the deal "Yahoo is not prevented from implementing any other advertising, promotion or marketing service."

Quite whether this will be enough to satisfy US regulators in unknown, with moves already under way to investigate the deal.

"This collaboration between two technology giants and direct competitors for Internet advertising and search services raises important competition concerns," says Herb Kohl, chairman of the Senate Antitrust Subcommittee.

"The consequences for advertisers and consumers could be far-reaching and warrant careful review, and we plan to investigate the competitive and privacy implications of this deal further in the Antitrust Subcommittee."

Google, however, believes everything's fine in regulator land: "We have been in contact with regulators about this arrangement, and we expect to work closely with them to answer their questions about the transaction. Ultimately we believe that the efficiencies of this agreement will help preserve competition."

In the meantime the deal appears to have earned Yahoo a reprieve from Carl Ichann, the investor who's looking to unseat the Yahoo board.

Author: Stuart Turton