Google-Yahoo Ad Deal Remains in Limbo

It’s been no secret that the advertising partnership between Google and Yahoo is in a great deal of trouble. The Justice Department, which has been investigating the deal for weeks, has raised concerns about its effect on competition. The companies have agreed to postpone its implementation multiple times, to give regulators more time to finish their investigation, and to see if they can reach a compromise that would address those concerns.

Late this week, speculation that Google or Yahoo would walk away rather than face a lawsuit or a consent decree grew more intense. But both companies said Friday that they were still talking with regulators. The Justice Department said its review is continuing.

One person close to the investigation said that Justice Department lawyers on Friday were asking other companies in the industry a new round of questions about possible remedies, suggesting that even if a compromise appeared to be a long shot, it had not yet been ruled out.

Regardless, Google or Yahoo may be unlikely to walk away from the deal until either the Justice Department files a lawsuit to block it or notifies the parties that it is about to do so. That’s because the contract between the companies says that either party may end the agreement “in order to avoid or end a lawsuit or similar action filed on competition law grounds … and defending such action is not commercially reasonable for that party.”

It is not clear what the penalty would be if one company walked away without a clear sign that regulators will block the deal. But it appears that the ball is squarely in the Justice Department’s court.

By Miguel Helft

Source : http://bits.blogs.nytimes.com