Google Yahoo! Deal Crumbles

It's over. Google and Yahoo! tried to bargain with the Department of Justice to allow them to proceed with their agreement to serve Google AdSense advertising on Yahoo! websites. The Department of Justice felt that this would give more than 90% search advertising share to Google.

Google and Yahoo! have been forced to abandon their plans, and that's bad news for both companies. Yahoo! will most likely face another hostile takeover bid by Microsoft. The market will be further concentrated with only two major competitors. Google will also face increasing scrutiny on all future agreements.

Of course, if the deal had gone through, Yahoo! would have become increasingly dependent on more lucrative Google advertising. Yahoo! was only buying temporary time with the move. Unless it figures something amazing out, its future is bleak.

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