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Google gets cold feet over Yahoo search ads deal

The much-discussed agreement that would have seen Google provide PPC advertising around Yahoo search results is no more.

Google decided to back out of the search advertising deal – first announced in June – after widespread criticism, including notable comments from rivals Microsoft, that it would create an effective monopoly in the search and PPC markets.

The agreement had also been reviewed the by the US Department of Justice, who informed Google that they would be issued with a lawsuit if they pressed ahead with the plan. Faced with what it called a “protracted legal battle”, Google decided to pull the plug. The decision looks set to cost Yahoo an estimated $800million (£494m) a year.

Speaking about the collapsed PPC deal, Yahoo’s co-founder and CEO Jerry Yang (right) said that, although he blamed the government for things not working out, he was “disappointed” that Google had not chosen to fight for the deal in court:

“I really thought the government in this case does not understand our industry. They have a market definition that I think is too narrow and I think things like this tend to have unintended consequences for our entire industry.

“So I clearly don’t agree with what the viewpoint is, but they are the government and they can decide on these things.”

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