Six months after it was first proposed, Mountain View, California-based Google has abandoned a search  advertising partnership with Sunnyvale, California-based Yahoo, citing the risk of a lengthy legal battle with United States Justice Department antitrust regulators, the search leader announced Wednesday. Yahoo Tie Up Would Have Been Good For Users, Google Said Google said that the scuttled deal would have been "good for publishers, advertisers, and users," and according to the company's chief legal officer David Drummond, it would have allowed Google and Yahoo to "show more relevant ads for queries that currently generate few or no advertisements." Drummond announced that it was leaving the proposed deal in a message posted on several of Google's Web corporate blogs, just one day after Google and Yahoo had reportedly offered to make substantial revisions to appease Justice Department regulators. "It's clear that government regulators and some advertisers continue to have concerns about the agreement," Drummond said in the Wednesday statement. Groups such as the Association of National Advertisers, one of the biggest advertising trade groups in the U.S. representing some 400 companies including such large firms as General Motors Corp. and Proctor & Gamble, had opposed the Yahoo-Google advertising partnership. Yahoo Disappointed With Google Decision Pursuing the proposed ad deal would have damaged certain Google partner relationships, Drummond said. "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," he noted. Yahoo said that it was disappointed with Google's decision "to withdraw from the agreement." In a Wednesday statement Yahoo said that 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." Justice Department assistant attorney general Thomas O. Barnett, who heads the department’s antitrust investigations, took issue with Google's assessment that the proposed partnership with Yahoo would benefit consumers. "The arrangement likely would have denied consumers the benefits of competition - lower prices, better service and greater innovation," Barnett said in a statement Wednesday. "The companies’ decision to abandon their agreement eliminates the competitive concerns identified during our investigation and eliminates the need to file an enforcement action," Barnett added. Google Abandons Proposed Yahoo Search Advertising Partnership Yahoo said that the failed deal was not a sign that it would cease to expand its efforts in the search advertising market. "This deal [...] does not change Yahoo's commitment to innovation and growth in search," Yahoo said Wednesday. Yesterday Yahoo and Google were said to have agreed to a less ambitious partnership that would have seen the length of the agreement shortened to two years from ten, and to impose a limit on the amount of revenue that Yahoo could have earned from the Google ads, restricting Yahoo's maximum to 25 percent of its search advertising revenue. The changes limiting the length of the proposed partnership and Yahoo's maximum revenue share were apparently not enough to satisfy Justice Department regulators. Microsoft, which has led opposition to the Yahoo search advertising agreement with Google, was seen by some analysts as the likely beneficiary of the failed deal, as it now could more easily pursue a new takeover bid or partnership of its own, should it wish to do so, with a Yahoo that is not tied to Internet titan Google. Related Links :
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