Google Pulls Plug On Advertising Deal With Yahoo

November 5, 2008 3:04 p.m. EST

Washington, DC (AHN) - Google Inc. announced Wednesday that it has ceased pursuing an advertising deal with Yahoo as the move faced several antitrust hurdles and opposition from other advertisers.

The Justice Department had previously notified Google that it planned to file a lawsuit blocking the deal on anticompetitive grounds. Rather than endure a drawn out legal battle, Google decided to walk away from the potential Yahoo partnership.

"Had the companies implemented their arrangement, Yahoo's competition likely would have been blunted immediately with respect to the search pages that Yahoo chose to fill with ads sold by Google rather than its own ads," the Justice Department said, according to Reuters.

The withdrawal by Google may be viewed as a blow to Yahoo's turnaround efforts. The partnership was a main piece of the company's effort to boost revenue growth.

Speculation has already begun to swirl that Microsoft could comeback into play. The software giant did spend a substantial amount of money fighting the Google-Yahoo deal and provided regulators with evidence that it would hinder competition in ad web space.

Google and Yahoo hold the number 1 and 2 spot, respectively, in the internet search market.