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Yahoo-Google Ad Deal Off

Calling it a distraction to its core mission, Google pulled the plug on an advertising agreement with Yahoo, according to statements from both companies Wednesday.

Announced in June, the non-exclusive agreement would have provided Yahoo"with access to Google's AdSense advertising programs on U.S. and Canadian Web properties," according to a Google fact sheet.

Billed as a win-win for both companies and consumers, the deal was opposed by Microsoft and others and underwent review from federal regulators. Google cited the lengthy review process and concerns by "some advertisers" as the reason for ending the agreement.

"Pressing ahead risked not only a protracted legal battle but also damage to relationships with valued partners," Google noted in a prepared statement. "That wouldn't have been in the long-term interests of Google or our users, so we have decided to end the agreement."

In a rather upbeat statement issued Wednesday, Yahoo said that it was disappointed that Google decided to terminate the agreement "rather than defend it in court."

However, the No. 2 search engine conglomerate said the decision would not change its commitment to growth and innovation in the search space.

"Going forward, Yahoo! plans to continue to provide the cutting-edge advances in products, platforms and services that the industry needs and expects, and intends to be the destination of choice for advertisers and publishers who want to reach one of the largest and most engaged populations of consumers on the Web," the statement said.

Meanwhile, shares in Yahoo surged by 11 percent the same day on rumors of a revised Microsoft takeover plan, according to Reuters. The report said information surfaced online after Google withdrew from the agreement with Yahoo. Both Yahoo and Microsoft denied the rumors, according to Reuters.

Interestingly, the rumor included news that Yahoo CEO Jerry Yang was leaving the company. Yang had opposed the unsolicited offer by Microsoft last spring. In fact, the agreement between Yahoo and Google was widely seen as an effort to keep Yahoo independent, according to Reuters.

About the Author

Herb Torrens is an award-winning freelance writer based in Southern California. He managed the MCSP program for a leading computer telephony integrator for more than five years and has worked with numerous solution providers including HP/Compaq, Nortel, and Microsoft in all forms of media.

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