Google AdSense Deal With Yahoo Looks Grim

By: Sara Smith
Staff Writer
Published: Oct 31, 2008

Google AdSense is a publisher program which would allow Yahoo to display advertisements. The partnership between the two search companies has been scrutinized by the Justice Department. The deal also faced criticism from other advertisers who fear higher prices.

The Google AdSense partnership between Google Inc and Yahoo Inc is falling apart, according to internal sources familiar with the matter. Google does not want to accept possible antitrust restrictions. Another source said that Yahoo still wants the deal.

"We are confident that the arrangement is beneficial to competition, but we are not going to discuss the details of the process," Google spokesman Adam Kovacevich said in a statement.

"We believe strongly that this agreement will strengthen Yahoo's competitive position," Yahoo spokeswoman Tracy Schmaler said in a statement. Schmaler said discussions with the Justice Department are ongoing.

Advertisers are worried that there will be higher prices with the Google AdSense and Yahoo partnership. They also expressed concerns that the deal will limit competition. Google and Yahoo had more than 80 percent of the Web search market in August.

The two business technology companies met Thursday with the Justice Department. The two search engine companies have had a series of meetings with regulators since late September. However, there are signs that they do not agree to government-imposed antitrust restrictions.

The deal to run Google AdSense advertisements on some of Yahoo's search results appears to be falling apart. Yahoo is also in talks with Time Warner Inc about purchasing content and advertising operations of its AOL division.

On the other hand, Yahoo could boost its cash flow by $250 million to $450 million in the first year of the Google-Yahoo deal.