Google pulls plug on Yahoo ads deal

 

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By Stuart Turton

Posted on 5 Nov 2008 at 16:55

Google has walked away from its proposed advertising deal with Yahoo, citing opposition from regulators and rivals.

Speaking on its blog, Google explained that pressing forward with the deal simply wouldn't have been in the best interests of the company.

"We're of course disappointed that this deal won't be moving ahead," says David Drummond, Google's cheif legal officer. "But we're not going to let the prospect of a lengthy legal battle distract us from our core mission. That would be like trying to drive down the road of innovation with the parking brake on."

Responding to the announcement, Yahoo declared itself "disappointed that Google has elected to withdraw from the agreement rather than defend it in court."

However, the US Justice Department, which had been investigating the deal, admitted it had informed Google it planned to file a lawsuit to block the deal on antitrust grounds.

"Had the companies implemented their arrangement, Yahoo's competition likely would have been blunted immediately with respect to the search pages that Yahoo chose to fill with ads sold by Google rather than its own ads," the Justice Department notes in a statement.

Google and Yahoo held 80% of the web search market in August, according to figures from web metrics firm comScore.

The collapse of the deal could tempt Microsoft to once again make a bid for Yahoo, although at a vastly lower price to what it was prepared to pay for the company in the summer.