Yahoo and Google Deal Denied by Justice Department

Just as we reported yesterday, it seems the Yahoo and Google web advertising deal has been rejected by the Department of Justice. The decision came early Wednesday morning when the Justice Department announced to the two top search engines that if they went ahead with their planned agreement (which would see Google ads on Yahoo's web pages), a lawsuit would be filed to block it.

According to reports, over the last few weeks federal antitrust regulators steadily became more and more critical of the deal.

Although there's still a chance the deal could be made with significant changes to its parameters, the Justice Department made no suggestions on what might be required. Instead, they assured the search companies and the media that their job is to assess deals in front of them, not broker new, more appropriate ones.

To most critics following the negotiations, it appears the agreement was a cut-and-dried antitrust issue. The original decade-long agreement between Yahoo and Google, first announced in June, would have seen Google ads placed on Yahoo's search pages in return for a cut of the advertising revenue. In other words, it would be almost impossible to avoid using Google in one shape or form.

Not long ago we reported that the search companies agreed to cut their agreement down from ten years to just two, but even that massive slash didn't seem to satisfy the Department of Justice.

It wasn't always so clear that the deal would be denied, however. According to sources informing CNET News, "Up until a few weeks ago, there was a lot of back and forth...After that, they began turning everything down." The snagging point appears to have been this: regulators weren't entirely sure Google would resist the urge to take over a majority of Yahoo, of the chance that Yahoo could simply decide to duck out of the search business altogether, willingly or not. That seems to mean that the Department of Justice never really trusted either company's future plan, be it in ten years or a couple. (Source: cnet.com)

Now that Google is no longer a factor, Yahoo's future is less certain than ever. Speculation now begins on whether or not Microsoft will make its way back into the picture. (Source: timesonline.co.uk)