After vowing repeatedly to go through with its search advertising deal with Yahoo no matter what the Justice Department does, Google reversed course today and pulled the plug on the deal. Chief legal counsel David Drummond writes:
. . . 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.
We’re of course disappointed that this deal won’t be moving ahead. But we’re not going to let the prospect of a lengthy legal battle distract us from our core mission. That would be like trying to drive down the road of innovation with the parking brake on.
Apparently, the recent revision of the deal’s terms to cap the amount of Yahoo’s revenues generated by Google at 25 percent was not enough to satisfy the Justice Department. And Google threw up its hands, giving up the fight.
The intransigence of the DOJ made the deal untenable. There was no longer enough upside to put up with all of the antitrust scrutiny the deal would continue to bring.
And then there is the Microsoft factor. The only reason Google offered the deal in the first place was to help Yahoo fend off Microsoft’s takeover advances earlier in the year. It is a different world now. Microsoft seems to have moved on. The financial markets have collapsed. Yahoo is going to have to fix its own problems.
Interestingly, Yahoo’s stock is up nearly 5 percent to $14 on the news (while Google’s is down 2 percent to $358). Is that because Yahoo’s destiny is once again in its own hands, or because Microsoft can now make another run at the company?
Microsoft was the biggest opponent of the deal, and its lobbying efforts seem to have paid off. It can now buy Yahoo for a much cheaper price than it originally offered (one analyst suggests $20 a share, compared to the $33 Microsoft once offered), and Yahoo has nowhere else to turn (except AOL, which isn’t doing so great).
Update: Yahoo is not happy with Google’s decision:
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.
I was on a conference call with the Department of Justice (Mary Walters, Antitrust Division) being interviewed about the impact on advertisers of the deal (I’m opposed) when she told me that she’d just got a news wire that the deal had been called off. Awesome!
obama will help google and yahoo!
Obama will take ALL their money!
funny… back to yahoo its like the dead body walking! don’t touch, don’t call don’t work with … i guess at end they will just think and get fresh ideas and work on their self without selling buying or joining
Yahoo! may one day thank Google for pulling the plug on this.
Yes, google will thanks for yahoo…?
R.I.P. – Yahoo 1994-2008
The people have spoken and I agree with Chris, Yahoo should be focus on their own strength. They’re the best chance we got (in additional to MS) to have a fair competition.
Haha your time is up Jerry Yang. If you really care about Yahoo, resign now and hope that your ego would be quickly forgetten as YHOO`s market cap is over 60% gone. You better be ashamed.
@ Basar – you are an idiot. Why should Jerry be ashamed? What have you done to match his achievements?
So goes away those $800 million/year Yahoo hoped to make in this deal.
I hope they will manage to survive and thrive…another internet player it’s good to have, beside Google and Microsoft…but they really have to get down the business…and if that means Jerry Yang has to go then so be it.
I wish them the best!
Bad news just doesn’t seem to stop for Yahoo!
A day or two ago, Yahoo! Live decided to go dead
Now this…What next for Yahoo! ??
How many weeks before Jerry gets canned?
Seriously, Is this the analysis you can come up with? It’s about Yahoo’s other talks with MS for $20 bucks is what made G pull out, it’s closer than you think
Highly unlikely. If Google knew of any talks Yahoo was having with MS, they would have gone on a little longer to stall. But, since the deal is finally called off, now MS can pursue Yahoo without having to worry about paying up Google in the process. $20 is pretty reasonable as it would be about the 60-70% premium they originally offered months ago, but the question is what will those $20 buy. Will it be just the search unit or the whole company?
I think Yahoo should buy ebay and also partner with Amazon.
blame it on the election?
im scared for yahope, they still have not called me. game changers are few and far between.
ChangeLocator.com- its here.
Wow, someone got played hardcore.
this is bad for Yahoo. the (once innovative) company is struggling like it has never struggled before. they really need help from a biggie (Microsoft, Google, Apple etc.). but whatever is it, i still am (and will be) a big fan of Yahoo!
http://www.livbit.com
BTW, this guarantees an AOL-YHOO deal by EOY. Have fun w/that integration!
This day keeps geting better and better. I woke up this morning as a Canadian and I was excited because I had someone in govt who made me want to believe again…the only downside was he is the president of the US and not Canada…but still so very excited….and now this. Talk about the icing on the cake.
This is a good thing for Yahoo…all you idiots who think Yahoo is done are clueless. They have decent traffic on a lot of their very good websites..the only problem they have is how to monitize that traffic.
Everyone thought myspace was dead and now we are seeing some very compelling reasons to give them a look again. The same thing could very easily happen to Yahoo.
yeah but the only difference between yahoo and myspace is that myspace is backed by fox while yahoo isn’t. yahoo has stockholders to answer to while myspace doesn’t. myspace had time to figure their business out, yahoo doesn’t.
This is great news. Once Jerry gets replaced (don’t get me wrong here, Jerry is a great entrepreneur and visionary but it takes someone else to navigate the ship once it has been built), serious talks with interested buyers can once again begin. This is great for anyone out there, except maybe believers of monopolies – and ehh – Google. Yahoo has 6 bln $ in cash at hand besides they have done a great deal in opening up their internal APIs. With their knowledge of Cloud Computing (e.g. Hadoop) they’d be an ideal fit for Microsoft. Since everything is open for inspection, Microsoft can go ahead and do the technical aspects of due-diligence from the outside…
MSFT drama will start again. Cant tolerate that once more
What Google did was a Drama… MSFT always had the serious intent to buy Yahoo!
Here’s what I would do if I were Jerry:
1. Buy About.com for $1B or <
2. Open up Yahoo Publisher Network so there’s 100% transparency and
guaranteed revenue share.
3. Buy out Advertising.com unit from AOL for $2B or $30M acquisitions to gain
a greater audience) and ride out the storm.
There’s no magic bullet solution for the company. They have a few options other than just selling out to MSN, this would be my choice.
http://www.SinglePill.com
This is a new beginning for Yahoo….don’t call it a comeback!
C’mon guys, this is simply a matter of allocating resources for more perspective projects…
Day 1: Google Wins Big at FCC Today
Day2: Google Pulls The Plug On Yahoo Advertising Deal
It’s now when I hear about this… and is no wonder!
I had a feeling Google was gonna do that
Yahoo is fundamentally strong. It just needs to concentrate more on building and maintaining its established services and it will be fine.
Yahoo doesn’t need to be bought out by Microsoft and undervalued. Yahoo doesn’t need to give up its search ambitions to Google.
It’s not an easy battle but Yahoo can still come out of this on top.
Microsoft will definately come back to the table now, but at much more stringent terms.
What about Apple buying Yahoo!? Could be an interesting move to compete with MSFT…
Not a chance Emperor Steve would buy a sinking ship. The Apple Empire can compete with Microsoft solo.
when will yahoo/MS realise that to compete in the search game, you need a standalone search site, not mixed with a portal. this is not so to look like google, but because this is more scalable. as of now, msn and yahoo search only works in countries where they have standalone portals. as far as i know, no one even touches yahoo search in countries where they dont have a local portals, and that means 20 odd countries. not to mention the clutter and distraction that a portal + search brings to the user even in countries where they do have a portal. yahoo needs to look beyond the display ads revenue and make a pure play global search brand
My guess is the retards that comprise the board at Yahoo will now vote to give Jerry a raise.
Why is this a surprise? 80% market share was always going to be a problem. Look at this development as an opportunity to profit from yahoo by buying shares or options on the chance of a potential takeover as discussed here ( http://www.savi...-as-google.html ). Just look at what the market and investors are saying and the stock price reaction (up). Yahoo’s days as an independent company are running out.
Bloggers are set to blog for peace November 6, 2008. Don’t miss it!
BlogBlast For Peace ~ How To Participate!
Is the stock rising, because investors see a potential that MSFT might make a bid again or what ? The market overall lost 300 points …
How big will the effect off this be? Maybe is time for the “The Microsoft Empire strikes Back” for Yahoo!?
Look at it this way: Google is actually EVIL. Google have done this before with AT&T and now Yahoo!. They simply gave Yahoo! another option during Microsoft deal. Making Yahoo! believe that it was in their best interest to walk away from Microsoft deal. All because Google didn’t want the Yahoo!-Microsoft deal at the first place. Once Google achieved its objective, they left Yahoo! high and dry. And don’t tell me that Google didn’t know that Microsoft will be lobbying against this deal. Google could have taken this to court and made it work if they actually wanted it. Truth is, its in Google’s best interest to just let Yahoo! roll over and die.
Yahoo! has been around for awhile and their problem is letting go of their past and moving into a new era. Its sad to see yahoo using all the wrong technologies. Seriously, I used to play Chess on Yahoo! and now I absolutely hate the user-experience. And there is bunch of people like me who used to pay for it and now we are moving on. What Yahoo! really want is a successful advertising business that can go head to head with AdSense. The only way to achieve this is compete and do
What did Google do with AT&T? I’ve never heard of that ..
I assume everyone knew this story:
http://techland...uld-be-a-bluff/
AT&T and Verizon won the wireless bid for the spectrum but Google walked away as a winner since its going to be an open platform, which is what Google wanted at the first place. Google won by not even winning. These are the same tactics you see here. Confusing Yahoo! during the Microsoft deal. Yahoo! taking the Google bait, walking away from Microsoft deal and then Google walks out blaming the Microsoft Lobby. Seriously?? So two Phd. candidates thought Yahoo!-Google deal was going to be a piece of cake?? Right!!
Yea, what’s the ATT story Lori?
Well said Enrique. Google strategically led Yahoo down the garden path, had some fun and frollicks, then having taken advantage, dumped Y! Yahoo! should have known better than to trust the enemy. Do no Evil was a lie.
Google and Yahoo Say Deal Would Have Survived a Suit
A day after Google walked away from an advertising partnership with Yahoo, Eric E. Schmidt, the chief executive of Google, said he believed that the companies would have been successful if they had chosen to defend the deal in court.
http://www.nyti...amp;oref=slogin
Share price rise or no share price rise. Yahoo are struggling. Jerry Yang out!
yahoo is dead
http://vidsonly.blogspot.com
It’s a good day for all publishers and advertisers…….competition is a good thing.
time for jerry to leave.. how much longer is this drama unfolding and everyone walking around the 500 ton pink elephant in the room. Yahoo is toxic… and every day jerry is there it gets worse.. I know being Asian it’s hard to lose face but the longer he keeps meddling around the worse it will get… he earned the title of probably having destroyed the most value in any internet company ever in the valley… and hanging on the longest to his job…
Ha ha. Google’s smart. Pretending to friend Yahoo and so that it can secure its own survival. Don’t be evil. Ha ha.
poor yahoo, the big GoogFather has been unkind.
Both will live very long:D
Google is Evil.
not evil, just business.
poor yahoo lol…
I am glad to hear yahoo lowered their ad pricing, doing that could save them. Lowering it so it’s affordable could double their sales and that might give them a marginal increase in stock cost.
I hope they can get through this.