Pact between online giants squashed by DOJ, AGs

John O'Brien Nov. 5, 2008, 3:44pm


OLYMPIA, Wash. (Legal Newsline) - Fifteen states and the federal Department of Justice have blocked a proposed advertising agreements between Google and Yahoo, Washington Attorney General Rob McKenna said Wednesday.

Google ads were to appear alongside Yahoo search results, but the investigation, led by Washington, California, New York and Texas, found that the agreement would violate antitrust laws, McKenna said.

He also said the investigators planned to bring a lawsuit if the agreement became official.

"Google and Yahoo compete aggressively for online search advertising and for search syndication deals with partner sites," McKenna said. "After a detailed investigation, state and federal antitrust enforcers concluded that the pact between these online giants would harm competition and innovation."

Google's chief legal officer wrote in a blog posting that the company is disappointed.

"After four months of review, including discussions of various possible changes to the agreement, it's clear that government regulators and some advertisers continue to have concerns about the agreement," David Drummond wrote.

"We're of course disappointed that this deal won't be moving ahead."

At issue were modifications made to the June agreement. The investigators said allowing Yahoo to outsource its search queries to Google could diminish competition for online search advertising and search syndication.

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