The Wall Street Journal is reporting (subscription required) that Google and Yahoo might be on the verge of walking away from their much-touted partnership on search advertising. According to the paper, the companies have been unable to reach and agreement with the U.S. Department of Justice on implementing the partnership, and a decision could come as early as next week.
Between then, Google and Yahoo account for the bulk of the search advertising market, with many estimates putting their combined share around 80 percent. Under the proposed partnership, Google would be able to sell advertising on Yahoo’s search results pages in a non-exclusive, auction format. The highest-paying ads—whether from Google or Yahoo’s ad networks—would appear on the site.
Yahoo was looking at the search deal as a financial shot in the arm, estimating the Google pact would bring in some $800 million in new revenue annually. However, the deal has generated vocal opposition from the online advertising market, who fear that letting Google sell ads on Yahoo’s pages will drive up advertising prices and give Google—which is already the dominant player in search advertising—unprecedented control over the search advertising market.
Both Yahoo and Google will publicly say only that discussions with regulators are ongoing and cooperative.
