Google pulls out of ad deal with Yahoo

Google pulls out of ad deal with Yahoo

Search giant seeks to avoid 'protracted legal battle' over partnership

(MarketWatch) -- Google Inc. pulled out of its proposed advertising partnership with Yahoo Inc. under pressure from regulators and clients Wednesday, leaving Yahoo's future in question as it struggles to maintain its share of the growing market for search advertising on the Internet.

However, by Wednesday afternoon shares of Yahoo said four months of antitrust review of the Yahoo partnership made clear that regulators and some advertisers "continue to have concerns" about it.

"Pressing ahead risked not only a protracted legal battle but also damage to relationships with valued partners," Google's chief counsel, David Drummond, said in the statement. "That wouldn't have been in the long-term interests of Google or our users, so we have decided to end the agreement."

What does this mean for the future of paid search ads? Yahoo said it was disappointed by Google's move, and maintained that the scuttled partnership would have been constructive for everyone. Yahoo had anticipated seeing hundreds of millions in additional annual revenue as a result of the deal...