Google announced it has cancelled its Internet advertising partnership with Yahoo because of antitrust and privacy related issues:
The retreat announced Wednesday represented another setback for Yahoo, which had been counting on the Google deal to boost its finances and placate shareholders still incensed by management's decision to reject a $47.5 billion takeover bid from Microsoft Corp. six months ago.
To Yahoo's dismay, Google backed off to avoid a challenge from the U.S. Justice Department, which said it would sue to block the Yahoo deal to preserve competition in Internet advertising.
"The arrangement likely would have denied consumers the benefits of competition — lower prices, better service and greater innovation," said Thomas Barnett, an assistant attorney general who oversees the Justice Department's antitrust division.
Without Google's help, Yahoo now might feel more pressure to renew talks with Microsoft and ultimately sell itself for much less than the $33 per share that Microsoft offered in May. Yahoo shares closed Wednesday at $13.92, gaining more than 4 percent in a move reflecting investor hopes that Microsoft might renew its pursuit.