November 03, 2008, 8:29 PM — Yahoo and Google have revised the terms of their search advertising deal to ease concerns that have stalled its approval by the U.S. Department of Justice, according to a report on the Wall Street Journal's Web site on Monday.
Under an agreement reached in June, Yahoo would run Google search ads on its own sites and the companies would split the revenue from them. It would bring Yahoo much-needed revenue as the company struggles to keep up in the advertising business. The companies voluntarily submitted the deal to the DOJ and delayed implementing it to wait for DOJ approval, which they haven't yet received.
The revised pact, submitted to the DOJ over the weekend, cuts the term of the arrangement from 10 years to two years and limits the revenue Yahoo could get from the deal to 25 percent of Yahoo's search revenue, the WSJ report said. It would also allow Google advertisers to opt out of having their ads shown on Yahoo sites, according to the report, which cited unnamed people familiar with the matter. It wasn't clear whether the changes would satisfy the DOJ.
Critics, including the Center for Digital Democracy and 10 members of Congress, have said the arrangement raises competition concerns because it would give Google too much power in the search advertising business. A letter from the lawmakers said it would let Google control as much as 90 percent of the market. Yahoo has set up a Web site to answer the criticisms.
Yahoo has said it would continue to operate its own search advertising system and compete with Google in basic search and other areas.
Yahoo is struggling to get the deal off the ground as its executives face ongoing criticism over the failure to reach a buyout deal with Microsoft earlier this year.
Representatives of the two companies were not immediately available for comment.
In after-hours trading on Monday, Yahoo's stock (Nasdaq: YHOO) was down US$0.08 to $12.67 after falling $0.07 during regular trading. Google (Nasdaq: GOOG) was up $1.51 in after-hours trading to $348.
