The Channel Wire

October 31, 2008

The often-delayed, potential Google-Yahoo ad revenue deal has taken another turn with Google saying it may drop the entire proposal rather than have the government dictate terms of the agreement with anti-trust restrictions.

The proposed ad revenue partnership came under the eye of federal anti-trust regulators because, between Google and Yahoo, the companies comprise nearly 80 percent of the Web search engine market, according to comScore.

Earlier this month, federal regulators stepped in and delayed the ad deal because of the anti-trust question that continues to stymie the deal.

But now, nearly a month later, Google is getting close to walking away from the deal entire, Reuters reports. Quoting an anonymous source, it seems that Google is tired of the delay.

"Are they more serious about walking away? Yes. Have they decided? I'm not sure," the source told Reuters. Yahoo, on the other hand, appears to still be interested in striking the deal -- even if that means submitting to government imposed restrictions and sanctions.

"Yahoo wants the deal, and they're willing to have Google sign anything at the Justice Department to have them do it," the source told Reuters.

Merging the Web advertising clout of the two companies has raised an outcry from advertisers who fear prices to place ads would skyrocket. Apparently, that argument holds some water, at least enough to have the government step in and scrutinize the deal.

If the deal is eventually approved before Google walks away, Yahoo stands to see a significant increase in the amount of money it would take in through online ads. In first year of the deal, some reports state, Yahoo's revenue stream could increase from $250 million to $450 million.

It's no wonder, then, that Yahoo is willing to accept federal regulation in order to see the deal go through.