Google Dumps Yahoo!

07 Nov Google Dumps Yahoo!

Yahoo! CEO Jerry Yang is the biggest loser – again. After four months of trying to get a controversial search pact past regulators, Google decided to dump Yahoo! rather than face a courtroom fight. “Yahoo! continues to believe in the benefits of the agreement and is disappointed that Google has elected to withdraw rather than defend it,” the company said in a statement. Left with few options, Yang signaled at the Web 2.0 conference in San Francisco that if Microsoft made an offer for Yahoo! he would be a willing partner. “To this day, I believe the best thing for Microsoft to do is to buy Yahoo!,” Yang said. But he stressed that there are no talks going on and that Microsoft has shown to interest in revisiting a deal. Google said yesterday that it was walking despite Yahoo!’s last-ditch attempt to gain approval by imposing restrictions on the ad deal, including capping the amount of revenue it stood to reap from the arrangement. Yahoo! was banking on the deal to boost its annual revenue by as much as $800 million and to placate shareholders angered when the company spurned Microsoft’s $45 billion takeover bid six months ago. Under the arrangement, Yahoo! would have let Google run ads alongside some of its search results in exchange for a revenue cut. Critics, including privacy advocates, advertisers and rivals, opposed the pact, arguing it would limit competition and raise prices. “Pressing ahead risked not only a protracted legal battle but also damage to relationships with valued partners,” David Drummond, Google’s chief legal officer, wrote on the company’s official blog. The financial impact on Google, which succeeded in keeping rival Microsoft away from Yahoo! for nearly six months, is minimal. In jilting Yahoo!, however, Google proved that despite its corporate motto, it can indeed be evil. “Yahoo! was brought up to think of Microsoft as the enemy, but maybe Google is,” said one industry executive who works with Yahoo!.Google’s move leaves Yang with fewer options for reviving the moribund Internet giant after many investors have already lost faith in his leadership.

New York Post, By HOLLY M. SANDERS and PETER LAURIA, November 6, 2008