Google and Yahoo Ad Pact Delayed as Review Continues

A pact between two of America's most popular search engines has been delayed. A controversial advertising deal between Google Inc and Yahoo Inc was pushed back, according to reports from Yahoo on Friday.

The delay is closely tied to controversy surrounding the agreement. Yahoo openly admitted that its deal with Google -- which would allow Google to sell advertising for some of Yahoo's online advertising space -- is being closely scrutinized by the United States Department of Justice. "We have had discussions with regulators and look forward to responding to their questions about this agreement," Yahoo stated. (Source: bloomberg.com)

The deal's negative fanfare goes well beyond the U.S. Department of Justice, however. It's also very unpopular with advertisers, who believe the advertising merger (of sorts) could drive up prices as Google's market share continues to widen (to 63%) and, according to some critics, become ever more monopolistic. By comparison, Yahoo's own piece of the pie shrunk to 19.6%, while Microsoft saw a similar slip to 8.3%. (Source: reuters.com)

President and CEO of the Association of National Advertisers Bob Liodice is happy the Google and Yahoo deal was delayed, but wants more drastic action to be taken. His organization, a powerful group in the web space industry, is firmly opposed to the pact.

For their part, Google and Yahoo contend that they've made every measure to ensure the legality of their agreement. "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," Yahoo stated.

The origins of the deal have also been under intense scrutiny. Many believe the pact, which provides Yahoo with a reported $800 million in advertising revenue, was signed to ward off the not-so-sultry advances of Microsoft, which aggressively sought to acquire the down-and-out search engine earlier this year.