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Yahoo & Google Reportedly Redo Deal To Appease Regulators

Google advertisers can also decline to have their ads appear on Yahoo sites. That’s reportedly new too.
By Maureen O'Gara
Article Rating:
November 4, 2008 04:51 PM EST
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 1,892

Yahoo and Google have reportedly revised their controversial advertising agreement to overcome Justice Department objections to the original deal.

According to the Wall Street Journal, which got it from unidentified sources, over the weekend the pair agreed to cap the amount of revenue that Yahoo can generate from Google search ads to 25% of its search revenues and shortened the length of the agreement from 10 years to two years.

What happens after two years is unclear.

Google advertisers can also decline to have their ads appear on Yahoo sites. That’s reportedly new too.

There was no cap in the original deal, which was supposed to bring Yahoo $800 million a year, a figure that would now be roughly cut in half. Reuters however says the initial expectation was more like maybe $450 million the first year and that now it looks more like $80 million-$100 million.

Meaning Yahoo would still have to come up with a viable long-term business plan, which activist Yahoo board member Carl Icahn still thinks lies in the arms of Microsoft – at least for the search end of Yahoo.

It’s unclear whether other concessions are involved, whether the regulators will approve the unconventional arrangement given the new terms, or whether advertisers represented by the Association of National Advertisers, which objected to Google’s mounting market power and control over ad rates, will go along with it.

The unconfirmed concessions are supposedly the companies’ last chance to get a government nod. They were reportedly told last Thursday that the DOJ was through negotiating and that they had to submit a final proposal this week, preferably by today.

Yahoo’s latest official statement says “discussions are ongoing.”

Google has reportedly been reluctant to make any changes and there’s been talk if would walk before submitting to government scrutiny.

Published November 4, 2008 – Reads 1,892
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More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025.

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