Yahoo and Google may have to scrap ad deal

New delay caused by worries over legality of advertising pact

Google Yahoo

In a sign that all may not be well with the proposed Google/Yahoo advertising partnership, the companies have agreed to delay the move to accommodate US Department of Justice inquiries.

The $800 million (£452 million) plan to have Google sell advertising on some Yahoo websites had been seen as a way to prevent Microsoft buying out Yahoo, but ran into trouble when the spectre of anti-competitiveness was raised.

All agreed

Google's statement on the matter said merely: "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."

However, the possibility of the DoJ finding fault with the tie-up has led observers to wonder if it will ever proceed.

Back to square one?

One lawyer quoted by Reuters said: "It means that they were not going to get a clean bill of health in time, and perhaps it's much worse than that. They don't want to go forward and be told that there's potentially a very serious problem there."

Should the plan fall apart under legal scrutiny, one thing is clear – it won't be long before Microsoft comes sniffing round an even more damaged Yahoo.