Google, Yahoo Ad Deal Unlikely

    October 31, 2008

Google and Yahoo may abandon their planned search advertising deal as early as next week.

According to the online edition of the Wall Street Journal, citing unnamed sources, reported that Google and Yahoo met with the Justice Department Thursday, and have not been able to reach an agreement to move forward on the deal.

Earlier this month Google and Yahoo agreed to put their search advertising deal on hold while Justice Department regulators reviewed the controversial partnership for antitrust violations.

Under the terms of the Google-Yahoo deal, Google would provide some of the advertising displayed when the Yahoo search engine is used. The two companies would share the revenue. The amount of advertising outsourced would be at the discretion of Yahoo.

Google has gone to great lengths to defend and explain the proposed deal with Yahoo. It has launched a page specifically dedicated to the "Facts about the deal" along with a number of other subcategories that argue in favor of such a deal.

Google, Yahoo Ad Deal Unlikely

Yahoo says the deal would generate between $250 to $800 million a year in additional revenue. Yahoo says it would use the cash to restructure and improve its search business in an effort to capture more users and increase search advertising sales.

Critics of the deal have worried that the agreement would lead to higher advertising prices and unfair competition.  The Association of National Retailers has voiced concern over the deal.

Combined Google and Yahoo had around 83 percent of the U.S. search market in August, according to comScore.