Google & Yahoo Try Again With New Ad Deal

Faced with continuing opposition to their original search ad partnership, Google and Yahoo have changed the terms and submitted a new agreement to the U.S. Justice Department.

According to the Wall Street Journal, the new deal changes the agreement from 10 years to two years and limits the amount of money that Yahoo can collect up to 25% of its search revenue. The new plan also includes an opt-out mechanism for Google advertisers who don’t want their ads to show on Yahoo.

The original Google-Yahoo deal was announced in June and drew immediate concerns over antitrust issues. At that time, Yahoo CEO Jerry Yang said that the two companies didn’t need regulatory approval for this deal because it’s open and non-exclusive. Google’s blog post about the deal went out of its way to dampen any antitrust claims.

That didn’t stop the Justice Department’s Antitrust Subcommittee from investigating the agreement. Last month, the two search engines agreed to delay implementing the deal while the Justice Department continued its investigation. As recently as last week, rumors circulated that Google and Yahoo were preparing to call off the agreement altogether due to Justice Department demands.

More discussion on Techmeme.

Postscript from Greg: While the new deal offers a more limited duration and caps potential Yahoo revenues — so that Yahoo doesn’t become “lazy” and too dependent on Google, presumably — it’s not clear that these changes will satisfy the objections raised by some marketers and trade groups: that Google controls too much of the search marketplace.

We know from talking to Yahoo quite a bit that they’re not complacent about consumer search and are rolling out (and planning) numerous innovations in the coming weeks and months.

I would assume that this new deal explicitly addresses some of the DOJ’s concerns because Google and Yahoo have been in ongoing talks with anti-trust regulators. Thus, on that speculative basis, I would imagine this has a much better shot at being approved. We’ll see.