Internet Marketing

From Silicon Alley Insider:

If Google and Yahoo go forward with their search partnership, they’ll have to sign a consent decree. Which will mean, that Google might have US government inspectors digging around in its books, business practices and contracts. The measly Yahoo partnership certainly don’t seem to be worth the government snooping around.

Jessica Vascellaro of the WSJ says Google’s close to walking from the deal. This means Yahoo’s board members might want to get back on the phone with Microsoft about selling the search business to them. The likelihood that Google Inc. and Yahoo Inc. will walk away from their planned search partnership has risen, say people close to the contract negotiations.

The two Internet search portals have so far failed to reach an agreement on their partnership with the US Justice Department, which has been building a lawsuit to block the deal. Following a meeting Thursday with the Justice Department, the companies could announce a decision to back away from the partnership — or a last-minute resolution, if one is reached — by the middle of next week, according to these sources.

The option to just scrap the deal has been on the table before, but Google in particular has begun considering it more seriously recently as talks with the Justice Department haven’t progressed. One sticking point has been the Justice Department’s discussion of having the companies sign a consent decree enforcing the terms of the search partnership. By doing so, the parties would be subjecting their compliance with the agreement to ongoing oversight by a judge.

Kara Swisher intelligently guesses what the reason Google gave the WSJ some of this story is to ramp up pressure on the Justice Department to cave. Google doesn’t need this deal, but Yahoo does (and if it doesn’t get it, it’s leverage to draw Microsoft into an alternative deal is very small.)

If that’s the strategy, though, it’s unlikely to work. Who, exactly, is going to complain to the Justice Department about blocking the Google-Yahoo deal? Yahoo shareholders? Not a particularly powerful constituency nowadays.

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-Brian R.

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