In what shouldn’t come as a big surprise, the protracted advertising deal between Google and Yahoo has fallen through.
The deal, which was originally announced in June this year, gave Yahoo! the option of running Google ads in its search results as well as on their partner sites. The two search engines felt this would benefit both users and advertisers - Yahoo’s ad inventory is smaller than Google’s therefore it would have expanded the amount of ads available to users, which in turn meant advertisers could make more money from a larger audience. Of course, not all advertisers saw things the same way as Yahoo and Google, arguing that the deal would impact the amount of choice they had in terms of who they could advertise with.
The deal ran into problems with government regulators who thought that the deal would see Google monopolise the PPC ad market, ultimately giving them an 80% share of the search market. Despite various changes to the deal over the months, the regulators have continued to raise concerns and therefore the deal has been dropped to avoid any long lasting legal struggles.
It will be interesting to see where this latest announcement leaves Yahoo. Having already rejected a takeover attempt from Microsoft at $31 per share and now seeing their share value languish around the $14 mark, now may be the time that Microsoft renews its bid. Without Google to lean on, Yahoo may have no option but to cash in for considerably less than they would have got in the summer.