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Google Declines to Fight for Yahoo

Nov 5th, 2008 | By | Category: Advertising

According to the New York Times, Google and Yahoo worked over the weekend preceding the election to scale back their partnership agreement in an effort to make it palatable to government regulators, only to learn that the antitrust feds were planning to file a lawsuit to block the agreement. Google announced the day after the election that it decided to walk away rather than defend the agreement in court.
“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,” David Drummond, Google’s chief legal officer, wrote on the company’s blog. Noting that several major advertisers had objected to the deal, Mr. Drummond added: “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.”

Shares of Yahoo promptly surged 11% after a report surfaced online that the web pioneer’s Chief Executive Jerry Yang was leaving the company and that Yahoo was in late stage talks to sell the whole company to Microsoft for between $17 per share and $19 per share.

Microsoft offered to buy Yahoo for $33 a share in May. Yahoo’s shares were trading around $14 on Wednesday. Google’s shares were down nearly 3 percent, around $356.

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