Under legal pressure, Google has terminated the advertising deal that was created as a substitute for Yahoo being taken over by Microsoft. On the Official Google blog, 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.
Hey, Dave, sorry to disappoint you but you made that decision far too late. The case has already put Google right in the middle of the Department of Justice's cross-hairs, and you've just taught the DoJ that you'll buckle under pressure. They'll be back.
The US Justice Department put out a statement saying:
"The companies' decision to abandon their agreement eliminates the competitive concerns identified during our investigation and eliminates the need to file an enforcement action," said Thomas O. Barnett, Assistant Attorney General in charge of the Department's Antitrust Division. "The arrangement likely would have denied consumers the benefits of competition — lower prices, better service and greater innovation."
Meanwhile Yahoo, the jilted lover, has put out a press release to say just how bereft it is:
Yahoo! continues to believe in the benefits of the agreement and is disappointed that Google has elected to withdraw from the agreement rather than defend it in court. Google notified Yahoo! of its refusal to move forward with implementation of the agreement following indication from the Department of Justice that it would seek to block it, despite Yahoo!'s proposed revisions to address the DOJ's concerns.
There will now be another million articles speculating on whether Microsoft still wants Yahoo's search business -- or even the whole of Yahoo -- or not. But if that deal is ever going to come off, I suspect it will need Yahoo co-founder Jerry Yang to quit, along with many of his board members. Microsoft ought to be able to get the company for, say, $20 a share. Since Yang has already turned down $40 (or so) per share and $33 (maybe $35), I don't see how he could approve $20 a share and survive.
Update: For Yang's later comments, see Jerry Yang Speaks At Web 2.0: Our Live Notes, at TechCrunch, and the BBC's Yahoo tells Microsoft: 'Buy us'.
