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Google and Yahoo Set Back Clock on Ad Deal

By Paul Hartsock
Oct 3, 2008 4:22 PM PT

Odd couple Google and Yahoo late on Friday reportedly opted to delay their proposed partnership, under which Google would essentially devour part of Yahoo's advertising business and create an online ad behemoth that critics say no rival could possibly compete against.

Google and Yahoo Set Back Clock on Ad Deal

On Thursday, Sen. Herb Kohl, D-Wis., the chairman of the U.S. Senate Antitrust Subcommittee, asked the U.S. Department of Justice to keep a close eye on Web advertising and the degree of competition within the industry, should it allow the Google/Yahoo partnership to go through. Under the senator's request, even if Google's and Yahoo's ad departments were allowed to start commingling, their combined effect on the market would remain under close scrutiny for some time.

To further delay this partnership -- which the companies have already voluntarily delayed pending regulators' review -- looks like a surrender, at least on the part of Google. Just last month, CEO Eric Schmidt rather brazenly said the company was through waiting for government officials and their assessment of whether the deal would hurt competition. He reportedly expressed a clear unwillingness to wait much longer than Oct. 11, the deadline Yahoo and Google established to consummate the partnership.

For its part, Yahoo is still trying to recover from its summer of horrors, as it fought tooth and nail to beat away both Microsoft's bear-hug and Carl Icahn's bid to take its steering wheel by force and drive straight to Redmond.

Yahoo's seeming last resort was the embrace of its former (and perhaps still, in a sense) enemy, which has fought valiantly to make the deal happen -- just not valiantly enough to risk finding itself on the wrong side of the Justice Department.

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