Google and Yahoo! abandon ad deal

Wed, 5 Nov 2008

The proposed advertising tie-up between Google and Yahoo! has been abandoned. The internet companies have blamed the "protracted legal battle" brought on by US and EU regulators for the decision.

Google chief legal officer, David Drummond, says: "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. That wouldn't have been in the long-term interests of Google or our users, so we have decided to end the agreement."

The deal would have involved Google providing some of the advertising around Yahoo!'s search results, and would have been run in the US for 10 years. Earlier this week, it was speculated this would be reduced to two years.

The partnership was originally announced in June but has faced anti-trust objections because the deal would see the two companies potentially controlling 80% of search activities in the US.

The news will be a huge disappointment to Yahoo! who recently announced that falling profits meant they had to make 10% of its workforce redundant. Yahoo! will now be hoping the due diligence merger talks with AOL will come to a more successful resolution.