Google, Yahoo Partnership May Not Materialize

The chances that Google and Yahoo will walk away from their planned search partnership has risen, The Wall Street Journal reports.

Yahoo partners with Google
Yahoo partners with Google

The two Internet companies have so far failed to reach an agreement on their partnership with the Justice Department, which has been building a lawsuit to block the deal.

The WSJ's report follows weeks of speculation that the deal was falling apart. Further, the likely disintegration of the deal is what prompted Yahoo to re-open discussions with Time Warner's AOL unit about a possible merger.

Most of the legal experts contacted that follow this case have advised that a Yahoo /Google partnership had little chance of passing anti-trust muster with the Department of Justice, which is set to issue its ruling any day now. Many thought an announcement would be made as early as today.

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A number of key advertisers, along with Microsoft , have been lobbying the Justice Department to block this deal, worried that a partnership would give Google way too much control over online advertising and the rates companies get charged.

It would appear that the balance has tilted in their favor and against a Yahoo/Google partnership, which at thus stage is certainly not a surprise.

If the deal doesn't happen, it will represent another blistering failure for Yahoo chief Jerry Yang who many believe horribly bungled the negotiations with Microsoft for a merger between those two companies.