advertising partnership

Google offered its rival Yahoo a marriage of convenience this past summer: an advertising partnership that would have given Yahoo an alternative to selling all or part of itself to Microsoft.

That proposed marriage fell apart Wednesday in the face of opposition from government antitrust regulators, leaving a jilted Yahoo under growing pressure to devise a new plan for growth.

The agreement also thrust Google, which dominates the most lucrative business on the Internet, squarely into the sights of regulators. That could force the company to rein in its ambitious goals for expansion.

The search-advertising marriage between Google and Yahoo has been called off. A flurry of press releases from the two search-engine giants and the antitrust division of the Department of Justice made it clear that Google wasn't willing to go forward with the deal in the face of possible DOJ action. The whooshing sound you hear is $800 million in ad revenue disappearing from Yahoo's bottom line.

The top Republican on the House Energy and Commerce Committee is joining a chorus of lawmakers urging the Justice Department to scrutinize the planned Internet advertising partnership between Google Inc. and Yahoo Inc.

Texas Republican Joe Barton also accuses Yahoo of resisting congressional inquiries into the deal. He said that many of the company's answers to his questions "seemed designed to obscure rather than clarify how the Google-Yahoo partnership would work."

The U.S. Justice Department's antitrust investigation of the advertising partnership between Google and Yahoo has revealed the growing resentment and fear of Google's power among some of the biggest players in the advertising industry -- the very customers that Google needs to keep expanding its business.

In a possible blow to Yahoo Inc.'s hopes for an advertising partnership with Google Inc., the Justice Department has hired an antitrust litigator to review evidence for what could become a legal challenge to the deal.

The Wall Street Journal reported Tuesday that the attorney is Sanford Litvack, a former vice chairman at Walt Disney Co. and chief of the Justice Department's antitrust division during the Carter administration.

Executives from Microsoft Corp. and Time Warner Inc.'s AOL are trying to advance discussions on a possible combination that could give the software maker an alternative to a deal with Yahoo Inc., a newspaper reported Wednesday.

Word of a meeting follows a breakdown in negotiations between Microsoft and Yahoo over the weekend, one that led activist investor Carl Icahn to step up efforts Monday to replace Yahoo's board in an Aug. 1 shareholder vote.