After vowing repeatedly to go through with its search advertising deal with Yahoo no matter what the Justice Department does, Google reversed course today and pulled the plug on the deal. Chief legal counsel David Drummond writes:

. . . 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 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.

We’re of course disappointed that this deal won’t be moving ahead. But we’re not going to let the prospect of a lengthy legal battle distract us from our core mission. That would be like trying to drive down the road of innovation with the parking brake on.

Apparently, the recent revision of the deal’s terms to cap the amount of Yahoo’s revenues generated by Google at 25 percent was not enough to satisfy the Justice Department. And Google threw up its hands, giving up the fight.

The intransigence of the DOJ made the deal untenable. There was no longer enough upside to put up with all of the antitrust scrutiny the deal would continue to bring.

And then there is the Microsoft factor. The only reason Google offered the deal in the first place was to help Yahoo fend off Microsoft’s takeover advances earlier in the year. It is a different world now. Microsoft seems to have moved on. The financial markets have collapsed. Yahoo is going to have to fix its own problems.

Interestingly, Yahoo’s stock is up nearly 5 percent to $14 on the news (while Google’s is down 2 percent to $358). Is that because Yahoo’s destiny is once again in its own hands, or because Microsoft can now make another run at the company?

Microsoft was the biggest opponent of the deal, and its lobbying efforts seem to have paid off. It can now buy Yahoo for a much cheaper price than it originally offered (one analyst suggests $20 a share, compared to the $33 Microsoft once offered), and Yahoo has nowhere else to turn (except AOL, which isn’t doing so great).

This post was originally posted by our content partner Techcrunch and is being republished on with permission. I occasionally syndicate news posts from Techcrunch I feel readers get value from and likewise you may see posts on Techcrunch from ShoeMoney at times.

By Jeremy Schoemaker

Jeremy "ShoeMoney" Schoemaker is the founder & CEO of ShoeMoney Media Group, and to date has sold 6 companies and done over 10 million in affiliate revenue. In 2013 Jeremy released his #1 International Best selling Autobiography titled "Nothing's Changed But My Change" - The ShoeMoney Story. You can read more about Jeremy on his wikipedia page here.

94 thoughts on “Google Tells Yahoo To Stick It”
  1. Wow! Crazy. I never could understand why Google was eager to help Yahoo out anyway.

    Maybe they didn’t want Microsoft taking over and making Yahoo a bigger competitor.

    For some reason I don’t think Google has any worries.

    1. You are so right. I think Google didn’t want Yahoo being a better competitor than them. The fact is, Yahoo maybe starting to get more popular because many people have thrown their hands up to Google, who has been banning websites from their index unfairly.

      I think Yahoo will make a good comeback. They will find a way somehow, and I am really rooting for them, because hopefully they can become a little more powerful than Google or at least a competitor.

      Some people have been seeing their website disappear from the index because google has been claiming they do not like people ‘paying for backlinks’. I say, what is the difference if you pay for them or not? There are so many ways to get backlinks, why should it matter?


      1. I’ve found that a lot of times when someone is banned from Google, it’s because they tried to be slick.

      1. I agree if Microsoft got their hands on Yahoo they could be a
        threat to Google so Google tried to get to Yahoo first

    2. Honestly, I somehow don’t really think that, even were Microsoft’s takeover of Yahoo! successful, that there’d be any realy threat to Google.. not as far as search goes, I think that Microsoft should leave search to the giant and focus it’s attention in areas more suited to it’s talents

  2. Yahoo is good on its own. They were own their own all this years so why would they need someone now. They still have lots of email users and they have lots of online services to offer.

        1. That’s kind of funny considering that they have their own contextual ads (YPN) as well. 😀

        1. LMFAO. AOL rhymes with LOL, hahaha. Sorry, just had one of those corny sense of humor moments. 😉

      1. I don’t understand why Yahoo doesn’t make money. They easily hold number 1 rank for most visited site, and they sell advertising. Google has less visitors, and makes money selling nothing but advertising.

        Maybe it is economy of focus? Google sells adwords and does search. Yeah, they have online apps, gmail, maps, etc. But for them that is play stuff, set and forget. On the revenue side it is adwords, adwords, adwords. Gone are the days of 5 cent clicks, I read two years ago during shoemoney’s PPC experiment he had a click as high as $8 (my adwords I limit way below a dollar- always). Maybe you all know of higher clicks nowadays.

        Yahoo! has heavy focus in a lot of different areas- mail (paid and free), hosting, personals, jobs search, search, IM, news, and more. Each with a different revenue model, different payment plan. We all know Yahoo and use it somewhere in our lives. But can anyone answer as simply as we could for Google- what does Yahoo do? How does Yahoo make money?

        1. Don’t forget the yahoo directory it costs 300 dollars to get into it,
          and they have a lot of sites in there

        2. perhaps Yahoo!’s problem is their diversification.. No focus. They don’t conquer any area to which they pay attention.. They spread themselves too thin.. “jack of all trades, master of none”

      2. Point very well taken! Tons of email users cost money & surely doesn’t make any!

  3. I read this today. Too bad for Yahoo, it doesn’t look like they are headed anywhere but down. At least with some recent business type decisions not going their way.

    1. I got burned by Yahoo stock in the past and decided to cut losses. Now getting killed on Google like the rest of the world. Sigh…

  4. I think that Microsoft should use Yahoo’s woes to purchase it at half the price it was offering Yahoo several months ago ( which is still a premium to what Yahoo is trading at the moment).

    Otherwise Yahoo could fall into obscurity..

      1. Hey now, WebCrawler could make a comeback. If Ace of Base can go back on tour, then anything is possible!

  5. Very interesting. I’m glad to see Google is still concerned about its reputation and business partners.

  6. Hard to say what will happen. Hopefully the economy turns around in ’09 and maybe that will revive some of those buyout plans.

  7. Very very interesting to see what’s going to happen over the next coming weeks and months. I think Microsoft could make another offer. Why not.. have the cost of what they were originally offering maayybe. lol. Anyway I hope they figure it out. I like my Yahoo traffic ; )

  8. That’s got to hurt if that one analyst is right and the sale of Yahoo does go through to Microsoft at $13 less per share then what they originally offered.

  9. Yeah I read this on techcrunch this morning. Pretty interesting stuff, I wonder what’s going to happen next.

  10. Enemy’s enemy is friend. Google seems to follow this rule. Its not really enemy though-you can say competitor. Google may be afraid that they can’t continue their domination if Microsoft and Yahoo are merged. So keeping yahoo alive will keep it away from being sold to microsoft Lets wait for the future to see the result.

  11. Google is not as good as they use to be. Especially since they have sold the business right under the noses of those two kids. What I really like about Yahoo is that they are the underdogs. Hopefully they will make a good comeback and beat out their competition. 🙂

  12. I think they just quit buying and try to buy parts of huge companies and worry about themselves.

    Google is doing just fine without them and will take them out without buying so let the sleeping dog lay.

    1. This is a poor business attitude. If you are beating your competition and there is more money to be made by either taking them over or having them work for you (IE Adsense ads on Yahoo) you should always take the option that will grow your business!

      1. Well, Google is in a position that allows them to have this attitude, they can have a deal again anytime, since they aren’t the one depending on it.

        1. They cant really get this deal any time they like… The main reason this deal fell apart is because of the anti-trust issues.

  13. Keeping the two separate creates the competition search marketing needs. I can already see click prices going crazy if the merger were to happen.

    I think yahoo should bring back those old commercials, then everything would be fine!

    1. Yahoo spending money on commercials will not do much for them… They do not have a problem with traffic; they have a TON of it. They have a problem with making money off of it!

  14. It sucks that the deal fell through, I wonder what will happen to Yahoo now. I think they will probally make a deal with Microsoft now

  15. I appreciate the info from techcrunch, as I am not enough a tech head to follow such a site. It is nice to know of a source to distill the need to know information.

  16. If Microsoft buys Yahoo it will be good for Google because MSN will just screw up Yahoo and more yahoo users will go to Google
    I hope they do it is easier to get listed on MSN and It would be nice if they move my MSN listings to Yahoo 🙂

  17. Google search is widely used, but a few occassions yahoo is better. yahoo did a big mistake in letting open their sites for google ads. Good move revoking the deal from yahoo.

    1. google rocks in search , yahoo is better with their email and content…sadly they have not been able to monetise these

  18. I love google but I think this is good to keep competition going. We all know how Microsoft’s windows suffered once they cornered the market.

  19. You could see this coming a mile away.
    IMHO it would have hurt Yahoo more than helped them.
    Just my $0.02

    1. yeah I agree Don. It wouldn’t have helped Yahoo much, it would have given Google the power to exploit them instead.

  20. Good news. Google seemingly has a monopoly on online advertising already, but this gives yahoo a reason to fight, rather than just fading into oblivion and settling for google ads.

  21. I believe that when the “new” internet supposedly 3.0, even though we are in 2.0 beta, yahoo will have a better advertisement system than google, and they will be at par.

  22. That was very cruel of Google. Why pull out on the last minute, that just disorganizes the other party as plans had already been drafted and some implemented by Yahoo for this joint venture. Terrible business ethics from Google.

  23. Google may think that they can’t continue their domination if Microsoft and Yahoo are merged that why he is helping Yahoo

      1. yes. but a few days ago yahoo founder jerry young said microsoft
        have to buy yahoo. and he said we were wrong after their offer.

  24. i work for yahoo, and many of my co-workers are besides themselves over this — in two different ways, the pros and the cons.

    it’s been a wild ride this year, and it looks like it’s going to get wilder. the microsoft rumors are back in play. who knows, maybe we’ll hear something today.

  25. I think yahoo is lagging behind in one step that is Yahoo publisher !!!

    Most of the people like yahoo but when they tried to get the a/c with yahoo they rejected the application….

    I feel its the one reason where they need to improve as google gets most of the visitors from India

    1. I think that Yahoo Publisher Network only accepts US publishers. Of course it takes them several days to approve you and sometimes they never let you know for months ( that was my case with one of my blogs)..

  26. I think yahoo helped google before thats why Google is helping yahoo now..

    Thats a kool friendship out there 😀

  27. Ummmm, Amar I really fail to see how Google is helping Yahoo! here, apart from down the tubes…heheheheh

  28. Yahoo should focus in improving YPN and the search engine instead of buying more services that are not necessarily profitable . I mean if money is the main problem then they should try to optimize what they have. Google has spent some time improving AdSense and finding more ways to cash on (Double Click). Yahoo should do they same instead of more services which require more staff increasing the the total amount that the company spends. If we take a look at what is happening to Yahoo’s decreasing staff we can clearly see the company is struggling with costs still, they continue to search for more projects to launch. Some thing to keep in mind that there is a Global Economic Crisis the main goal is to survive. Make existing services better especially those that are the pillars in which the whole company stands (YPN) if we look at what Google is doing we see that Google is adding AdSense to everything they can. I think that is what Yahoo should do with YPN or maybe get themselves an another network like Google did with Double Click.

  29. It’s definitely interesting to thing that these news weren’t that bad for Yahoo stock price. While the market has dropped by 10% over the past 2 days, Yahoo is actually up over 5%..It’s even up today..

  30. I just think Jerry Yang just needs to go and let Yahoo get back to doing what it does best. I hope no one buys Yahoo and we always have at least 3 engines.

  31. Not surprised in the least. Google are better off on their own to be honest.

  32. Google didn’t want yahoo going to microsoft…… we now recently microsoft hands up dealing with yahoo.

  33. shoemoney.bald-loss !!!

    It appears from your ”pics” UR a “BOOB.arse BANDIT”

    whatz that has to 2do with beeeeats me ???

  34. That’s got to hurt if that one analyst is right and the sale of Yahoo does go through to Microsoft at $13 less per share then what they originally offered.

  35. That’s got to hurt if that one analyst is right and the sale of Yahoo does go through to Microsoft at $13 less per share then what they originally offered.

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