Google pulls out of Yahoo Deal

The troubled advertising deal between Google and Yahoo has been officially put out of its misery by the search engine giant. Since its inception, the deal had come up against strong criticism from advertisers, who feared prices would rise and the US Department of Justice, who feared that the deal would be anti-competitive.

The DoJ’s objection is strongly rumoured to have been stoked by Microsoft who, it is thought, have been making full use of their extensive government contacts and lobbying hard for the deal to be blocked. Indeed it was the DoJ who put the final nail in the coffin after informing Google that they were filing a lawsuit to stop the deal going ahead.

Microsoft’s involvement is ironic, as the dissolution of the deal once again raises the prospect of a strategic partnership between Microsoft and Yahoo. This would be viewed as a failure for Yahoo’s founders, Jerry Yang and David Filo, who have been fighting tooth and nail to keep the company independent ever since Microsoft’s hostile bid to buy the company.

The deal with Google was viewed as Yahoo’s best shot at going forwards. With that now off the table, many people expect a deal with Microsoft to emerge early next year. So much so, that after the news of the Google’s decision broke Yahoo stock jumped 5% in anticipation of a buy out/deal.

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6. Microsoft looks likely to link up with Yahoo… Finally