A Defeat for Yahoo!, an Opportunity for Microsoft
Yesterday, it became official: Google renounced the planned search-ad deal with Yahoo!. The search engine wishes to avoid the probably expensive legal procedure necessary to convince skeptical government regulators and advertisers that this partnership would not endanger the competition.
“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,” explained David Drummond, Google’s chief legal officer.
Google and Yahoo, the two biggest players on the worldwide web search market, had planned to enter the deal in June, but the project had to be examined by the American Justice Department’s antitrust regulators first. The latter had threatened to block the Google-Yahoo ad-deal because of the effect it would have on the competition in the sponsored web links market. According to ComScore, together the two companies hold 83% of the American sponsored link market and encash 50% of the worldwide online advertising earnings. Antitrust authorities thus regarded the deal as a threat to the market and the competition.
The rejection of the deal is a setback for Yahoo!. The company had agreed to the deal in order to avoid being bought up by IT giant Microsoft, who at the time wanted to take over Yahoo!. Many analysts think that Microsoft might now use this opportunity to try again, especially as Yahoo!’s management is under pressure. The company’s shareholders were not pleased to see a deal worth more than 47.5 billion dollars (37.3 billion euros) slip through their fingers.
To compensate for that, Yahoo! might decide to buy AOL, Time Warner’s giant web service, which has been on sale since this May. Both companies opened their books at the end of October in order to deliberate on integrating AOL content and advertising onto Yahoo!. Time Warner would have a share in this new cooperation. Still, the revenues generated by this solution would be a far cry from the expected income generated by a potential partnership with Google.
Google, on the other hand, has recently disclosed its turnover for the third quarter of 2008, which amounted to 5.54 billion dollars. This equates to a one year growth rate of 31%. The net results rose by 26% to a total of 1.35 billion dollars.
Sources :
journaldunet
lepoint.fr
boursorama
Tags: google, Search engine, yahoo
