With DOJ set to block Google-Yahoo!, Google pulls out

The Department of Justice told lawyers for Google Inc. and rival Internet search company Yahoo! Inc. Wednesday that the agreement between the companies is a no-go. DOJ said it would announce its decision to challenge the deal by midday Wednesday, according to sources who asked not to be named.
 

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And Google senior vice president David Drummond Wednesday announced that Google was throwing in the towel and would not fight DOJ in court.

"We're of course disappointed that this deal won't be moving ahead," Drummond wrote on his blog. "But we're not going to let the prospect of a lengthy legal battle distract us from our core mission. That would be like trying to drive down the road of innovation with the parking brake on. Google's continued success depends on staying focused on what we do best: creating useful products for our users and partners."

The DOJ has been reviewing a contract between the two companies that sought to bolster Yahoo!'s revenues, and keep it out of the hands of rival software behemoth Microsoft Inc. ever since that company announced a bid for Yahoo! in February.

Google's effort was seen as a white-knight rescue, but it proposed running the agreement past DOJ before implementation to make sure antitrust regulators were comfortable with it. DOJ, however, took a strong dislike to the agreement, saying that any cooperation between two of the three largest online search advertising platform would likely harm consumers by reducing competition. - Cecile Kohrs Lindell

See earlier stories:
DOJ challenge to Google-Yahoo! looms
Hope fades for Google-Yahoo!
See Google press release

Cecile Kohrs Lindell is a senior reporter in The Deal's Washington bureau.

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