Knowledge is the Foundation To Success  

A blog entry released earlier today (view here) by David Drummond, Senior Vice President and Chief Legal Officer with Google, publicly announced Google’s decision to walk away from a planned partnership with Yahoo! (view details about the agreement here). This is not a huge surprise, as the deal was recently delayed, but it is now official.

The blog states, “… 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. Pressing ahead risked not only a protracted legal battle but also damage to relationships with valued partners. That wouldn’t have been in the long-term interests of Google or our users, so we have decided to end the agreement.”

In response, Yahoo! said it was disappointed by Google’s decision and maintained that the abandoned partnership would have been beneficial for everyone. Yahoo! just lost out on hundreds of millions of dollars in additional annual revenue that would have resulted from the deal. Yahoo!’s statement also said that they are, “disappointed that Google has elected to withdraw from the agreement rather than defend it in court.”

Several analysts speculate that losing the Google deal will make Yahoo! more likely to revisit a possible deal with, or outright buyout from Microsoft. Details of the Google-Yahoo! partnership put up significant barriers to a Microsoft buyout – barriers that no longer remain. Yahoo!’s stock price finished up today despite the DOW plunging 486 points, likely due to investor speculation and hopes for renewed buyout potential. We’ll see how this plays out, but I’m confident that Microsoft execs are talking about this situation as I type. Tic toc. Tic toc. Time will tell if Microsoft will come back to the table. In the meantime, Google continues to expand their search dominance.

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Amid growing concern, Google and Yahoo! both announced the planned Google – Yahoo! alliance will be delayed. Both companies released similar statements, with Google saying, “When we announced our advertising agreement with Yahoo in June we agreed to delay its implementation until October to give regulators time to look at the details. As we are still in conversation with the Department of Justice we have agreed to a brief delay in implementing the agreement while those discussions continue.”

This is not too surprising based on the increasing opposition this deal continues to face on various fronts. I knew the anti-trust investigation was serious back in July when the Department of Justice contacted us here at JumpFly. Some big organizations in opposition include the World Association of Newspapers, which represents over 18,000 newspapers, and the Association of National Advertisers (ANA), which represents over 400 companies and 9,000 brands (view previous article and video about this).

Looks to me like this deal is likely not going to ever happen. Google and Yahoo’s combined search market share would be a staggering 83%, a number that more and more parties are not comfortable with. The immediate loser that comes to mind here is Yahoo! as they stood to gain an additional $800 million per year in revenue from this deal. Ouch. However, this was a strange agreement anyway, where two arch- rivals were looking to work together. One winner here is Microsoft, who is hanging on to 8% share of the search market and trying to avoid elimination from the search engine marketing arena. They would love to see this deal permanently tabled. Time will tell, but for now, no deal.

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Recent Google News:
Google News Recap – New G1 Phone, Chrome Browser, Stock Madness and More

The Stock Market Crashes: 

The stock market is crashing and it looks like we are smack dab in the middle of a financial crisis. The stock market collapsed this week, fueled by a bankruptcy by Lehman Brothers, the 4th largest bank in the US, in addition to a federal bailout of AIG, the world’s largest insurer. This is on top of ongoing labor concerns, with another 84,000 layoffs reported in August, the eighth straight month of cuts. Plus, that’s on top of the
current housing meltdown we’ve experienced over the past year or so. Not good.

Businesses are likely to put off any new or increased advertising going forward and may even look to scale back in these times of uncertainty. The next 3 months will prove how well online advertising can weather really poor economic conditions.

Another Organization Opposes Google-Yahoo! Deal 

In other news this week, The World Association of Newspapers, which represents over 18,000 newspapers, said the planned Google-Yahoo! deal should not be allowed because of antitrust concerns. This comes after last week’s concern expressed by the ANA, which represents over 400 companies and 9,000 brands. Interestingly, Google’s CEO said that much of the negative publicity aimed at the proposed partnership has been stirred up by Microsoft, saying, “We’re quite certain that Microsoft is busy helping people get upset about things.” The Microsoft, Google War rages on.

Yahoo! Launches Redesigned Homepage: 

Just today, Yahoo! Launched a redesigned homepage, which is the most heavily trafficked site on the Web, but initially made it available to just 1% of its users. It will be slowly rolled out going forward and appears to offer some nice custom features. The new home page allows users to see when new information arrives not just on Yahoo! e-mail or Yahoo! news, but from other desired destinations as well, such as eBay or Gmail. The Yahoo home page attracts more than 100 million U.S. users a month and 300 million worldwide. That’s a lot of users, and that’s all for this week’s PPC Advertising Review.

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