Both Sunnyvale, California-based Yahoo and Mountain View, California-based Google have offered to revise the  terms of their proposed search advertising partnership in order to increase the likelihood that the United States Justice Department will approve the deal, a decision the regulators were expected to make as early as this week, according to a Monday Wall Street Journal report citing an unnamed person familiar with the agreement. Length Of Search Pact Cut From 10 Years To 2 The less ambitious partnership between the top two U.S. search engine firms would see the length of the agreement shortened to two years. The original proposed agreement would have extended to as long as a decade if all optional renewals had taken place, allowing leading search engine firm Google to provide ads alongside search results from the second most popular search engine firm Yahoo. Yahoo and Google have been awaiting a decision from Justice Department regulators who are examining whether the proposed search advertising partnership between the two would violate antitrust laws by creating a partnership that could control too large a portion of the market. The two companies have also agreed to place a limit on the amount of revenue that Yahoo could earn from the Google ads, restricting Yahoo's maximum to 25 percent of its search advertising revenue, according to the person first cited in the Journal report. The nonexclusive search advertising deal, first proposed in June, would place ads from Yahoo and Google into online auctions that other firms would be open to take part in. In October Yahoo president Susan Decker said the Sunnyvale, California-based Web pioneer would use the auction system to avoid setting search term pricing. Yahoo Limited To 25 Percent Search Advertising Revenue "Let me be absolutely clear that we are not in any way going to be coordinating or setting search term pricing with Google," Decker said at the time. By imposing the 25 percent limit reported Monday, Yahoo was likely seeking to  assuage concerns that it could use the deal with Google to eventually exit the search advertising market entirely. As early as last month both Internet firms were reported to have considered concessions including a limit to the number of Google ads Yahoo would display, various oversight and reporting schemes, and other measures to keep advertiser costs from rising should the agreement receive approval, according to unnamed lawyers involved in discussions between the two firms. Google has said that it believed the partnership with Yahoo would be "good for competition" and "benefit advertisers, Web site publishers and consumers." In October the proposed partnership drew a call for increased scrutiny from U.S. Senate antitrust subcommittee chairman Wisconsin Senator Herb Kohl. Whether the changes limiting the length of the proposed partnership and Yahoo's maximum revenue share are enough to satisfy Justice Department regulators remained to be seen as on Tuesday. The antitrust examination continued and was still pending, according to Justice Department spokeswoman Gina Talamona, while representatives from Yahoo and Google have not commented on the terms of the revised agreement or its likelihood of receiving approval. Yahoo And Google Make Deal Concessions Ahead Of Regulator Decision Microsoft has led the opposition to a Yahoo search advertising agreement with Google, maintaining that such a digital advertising powerhouse would wield an inordinate 90 percent portion of the market. "Any definitive agreement between Yahoo and Google would consolidate over 90 percent of the search advertising market in Google’s hands," Microsoft general counsel Brad Smith said in an April statement. "This would make the market far less competitive," Smith added. Yahoo said in June that the agreement with Google would lift the firm's operating cash flow some $250 million to $450 million during its initial year, and that it had the opportunity to bring in as much as $800 million in annual revenue to the firm as it seeks to recover financial strength lost during the prolonged hostile takeover bid by Microsoft. Yahoo would likely take in significantly less cash under the terms of the more limited revised agreement revealed Monday. Related Links :
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10:02 pm on Nov. 4, 2008 (utc 0)