Wednesday, November 05, 2008

Google Abandons Deal with Yahoo, after the Department of Justice informed the companies that it would file an antitrust lawsuit to block the agreement

BBC News....Google has decided to abandon its advertising partnership with Yahoo to avoid having a "protracted legal battle" with regulators. The deal involved Google providing some of the advertising around Yahoo's search results and would have been worth $800m (£494m) a year to Yahoo. It was originally announced in June but has faced anti-trust objections.
Yahoo said in a statement it was disappointed that Google had decided not to fight for the deal in court. Yahoo was relying on the deal with Google to help to placate shareholders angry about Yahoo rejecting Microsoft's takeover offer.
Google said it would not allow the prospect of a legal battle to distract it from its core mission. "That would be like trying to drive down the road of innovation with the parking brake on," Google said in a blog.

US Department of Justice...Yahoo! Inc. and Google Inc. Abandon Their Advertising Agreement Resolves Justice Department’s Antitrust Concerns, Competition Is Preserved in Markets for Internet Search Advertising.

WASHINGTON — Yahoo! Inc. and Google Inc. abandoned their advertising agreement after the Department of Justice informed the companies that it would file an antitrust lawsuit to block the implementation of the agreement. The Department said that, if implemented, the agreement between these two companies accounting for 90 percent or more of each relevant market would likely harm competition in the markets for Internet search advertising and Internet search syndication.

"The companies’ decision to abandon their agreement eliminates the competitive concerns identified during our investigation and eliminates the need to file an enforcement action," said Thomas O. Barnett, Assistant Attorney General in charge of the Department’s Antitrust Division. "The arrangement likely would have denied consumers the benefits of competition –lower prices, better service and greater innovation."

The agreement would have enabled Yahoo! to replace a significant portion of its own Internet search results advertisements with search results advertisements sold by Google. After an extensive investigation that was facilitated by the companies’ cooperation and agreement to provide the Department time to investigate prior to implementation, the Department concluded that Google and Yahoo!INC would have become collaborators rather than competitors for a significant portion of their search advertising businesses, materially reducing important competitive rivalry between the two companies.

Although the companies proposed various modifications to their original agreement in an effort to address the Department’s antitrust concerns, the Department determined that such modifications would not eliminate the competition concerns raised by the agreement.

The Department and the Canadian Competition Bureau cooperated extensively throughout the course of their investigations. Attorneys General from 15 states – California, Connecticut, Delaware, Florida, Hawaii, Iowa, Maryland, Massachusetts, Michigan, Missouri, New Hampshire, New York, Texas, Wisconsin, and Washington – also participated in the investigation.

Bill Warner
Private Investigator