Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2008/200811/20081101/article_378981.htm
Google Inc may drop ad venture with Yahoo
Created: 2008-11-1
Author:Matthew Newman
GOOGLE Inc is considering dropping its proposed Internet-search advertising venture with Yahoo! Inc because it is reluctant to accept restrictions to avert a possible court challenge by United States antitrust officials, sources said yesterday.
A collapse of the planned venture between the two biggest online advertising companies would deprive Yahoo of as much as US$450 million in operating cash flow over a year. Microsoft Corp offered as much as US$47.5 billion to buy Yahoo earlier this year.
Google is pondering pulling out of the agreement with Yahoo because it doesn't want to accept conditions the government may require to avoid harm to competition in the market for online advertising based on Internet searches, sources familiar with the matter told Bloomberg News.
Google may have thwarted an acquisition of Yahoo by Microsoft simply by tying up the company in a lengthy Justice Department review, said Rebecca Arbogast, an analyst for Stifel Nicolaus & Co in Washington.
"This kept Yahoo out of the arms of Microsoft for a good long time," Arbogast said. "That is a very good, practical outcome from their point of view. Given further shrinking and problems at Yahoo, it could be that they kept Yahoo out of Microsoft's arms forever."
Adam Kovacevich, a Google spokesman, declined to comment, saying "we are still talking" with the Justice Department. Yahoo spokeswoman Tracy Schmaler said "discussions are ongoing" with the government.
"We believe strongly that this agreement will strengthen Yahoo's competitive position in online advertising and will help to drive a more robust, higher quality Yahoo marketplace for our advertisers, publishers and users," Schmaler said.
Last month, Yahoo and Google said they had agreed to a "brief" delay in the start of the venture to allow the courts time to investigate and review the deal.
A collapse of the planned venture between the two biggest online advertising companies would deprive Yahoo of as much as US$450 million in operating cash flow over a year. Microsoft Corp offered as much as US$47.5 billion to buy Yahoo earlier this year.
Google is pondering pulling out of the agreement with Yahoo because it doesn't want to accept conditions the government may require to avoid harm to competition in the market for online advertising based on Internet searches, sources familiar with the matter told Bloomberg News.
Google may have thwarted an acquisition of Yahoo by Microsoft simply by tying up the company in a lengthy Justice Department review, said Rebecca Arbogast, an analyst for Stifel Nicolaus & Co in Washington.
"This kept Yahoo out of the arms of Microsoft for a good long time," Arbogast said. "That is a very good, practical outcome from their point of view. Given further shrinking and problems at Yahoo, it could be that they kept Yahoo out of Microsoft's arms forever."
Adam Kovacevich, a Google spokesman, declined to comment, saying "we are still talking" with the Justice Department. Yahoo spokeswoman Tracy Schmaler said "discussions are ongoing" with the government.
"We believe strongly that this agreement will strengthen Yahoo's competitive position in online advertising and will help to drive a more robust, higher quality Yahoo marketplace for our advertisers, publishers and users," Schmaler said.
Last month, Yahoo and Google said they had agreed to a "brief" delay in the start of the venture to allow the courts time to investigate and review the deal.
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