Google speaks out over failed Yahoo deal

7 November 2008 16:01 GMT / By Katie Scott

When the news was announced that the Google and Yahoo ad deal was off, poor old Yahoo was just left expressing its "disappointment".

It released a statement saying how gutted it was that Google had, basically, bowed to the concerns of the Department of Justice in the US, as well as pressure from private individuals as well as politicians and "elected to withdraw from the agreement rather than defend it in court".

Google kept quiet but has now released its own statement explaining why it has walked away.

It writes: "In June we announced an advertising agreement with Yahoo! that gave Yahoo the option of using Google to provide ads on its websites (and its publisher partners’ sites) in the US and Canada".

"At the same time, both companies agreed to delay implementation of the agreement to give regulators the chance to review it. While this wasn’t legally necessary, we thought it was the right thing to do because Google and Yahoo have been successful in online advertising and we realised that any cooperation between us would attract attention."

Google goes on to defend the deal has an agreement that "would have been good for publishers, advertisers, and users – as well, of course, for Yahoo and Google" claiming "it would have allowed Yahoo (and its existing publisher partners) to show more relevant ads for queries that currently generate few or no advertisements. Better ads are more useful for users, more efficient for advertisers, and more valuable for publishers".

But, pointing to the concerns from "government regulators and some advertisers", Google explains that it would have been damaging to press on: "Pressing ahead risked not only a protracted legal battle but also damage to relationships with valued partners. That wouldn’t have been in the long-term interests of Google or our users, so we have decided to end the agreement."

The Department of Justice has also released a statement in which its concerns.

"Yahoo and Google 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," it says.

"The Department said that, if implemented, the agreement between these two companies accounting for 90% or more of each relevant market would likely harm competition in the markets for Internet search advertising and Internet search syndication", it continues.

"The companies’ decision to abandon their agreement eliminates the competitive concerns identified during our investigation and eliminates the need to file an enforcement action", added 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."

Full tags

Biz, Yahoo, Google, EU, Lawsuits, Microsoft