Google-Yahoo! ad deal falls apart

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In June, both companies agreed to delay implementation of the agreement to give regulators the chance to review it. While this wasn't legally necessary, both companies realised that since they had both been successful in online advertising, any co-operation between them would attract attention.

Indeed, when Google first announced its intention – back in April – to begin a two-week ad-space sharing trial with Yahoo! there were a few ruffled feathers at Microsoft, particularly since Yahoo! was, at the time, busy rejecting Microsoft's proposals to acquire the company.

According to David Drummond, Google's senior vice president of corporate development & chief legal officer, Google believes that the agreement would have been good for publishers, advertisers, and users – as well as for Yahoo! and Google, because it would have enabled Yahoo! and its existing publisher partners to show more relevant ads for queries that currently generate few or no advertisements.

However, after four months of review, including discussions of various possible changes to the agreement, it's clear that government regulators and some advertisers continue to have concerns about the agreement. Pressing ahead risked not only a protracted legal battle, but also damage to relationships with Google's partners, which, says Drummond, wouldn't have been in the long-term interests of Google or its users.


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