Google Exits From Advertising Deal with Yahoo

November 7, 2008 · Filed Under News by Kalyani Mukherjee·  

Google Inc walked away from a proposed advertising partnership with Yahoo in the wake continuing pressure from government regulators as well as clients.

Google said in its corporate blog that it was pulling out of the advertising partnership deal with Yahoo as even after four months of anti-trust review, regulators and some advertisers continued to express concerns about the deal. Under the terms of the deal Yahoo would hand over a share of its advertising business to Google in exchange for a share of any resulting revenue. Google chief counsel, David Drummond said in a statement that pushing ahead with the deal would have meant incurring long expensive legal battles as well as soured relationship with clients.

The break up of the proposed advertising deal with Google has left Yahoo in a critical position as it struggles to hold on to its share of the growing market for search advertising on the Internet. The fruition of the partnership deal would have landed Yahoo with hundreds of millions in advertising revenue deal. Yahoo officials responded to Google’s exit from negotiations with disappointment and maintained that the partnership would have been lucrative for all parties.

However by Wednesday afternoon share prices of Yahoo rose by more than 4 percent on hopes that the company would now restart merger negotiations with former suitor Microsoft Corp.

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