A blog entry released earlier today (view here) by David Drummond, Senior Vice President and Chief Legal Officer with Google, publicly announced Google’s decision to walk away from a planned partnership with Yahoo! (view details about the agreement here). This is not a huge surprise, as the deal was recently delayed, but it is now official.Google Ends Yahoo! Partnership

The blog states, “… after four months of review, including discussions of various possible changes to the agreement, it’s clear that government regulators and some advertisers continue to have concerns about the agreement. Pressing ahead risked not only a protracted legal battle but also damage to relationships with valued partners. That wouldn’t have been in the long-term interests of Google or our users, so we have decided to end the agreement.”

In response, Yahoo! said it was disappointed by Google’s decision and maintained that the abandoned partnership would have been beneficial for everyone. Yahoo! just lost out on hundreds of millions of dollars in additional annual revenue that would have resulted from the deal. Yahoo!’s statement also said that they are, “disappointed that Google has elected to withdraw from the agreement rather than defend it in court.”

Several analysts speculate that losing the Google deal will make Yahoo! more likely to revisit a possible deal with, or outright buyout from Microsoft. Details of the Google-Yahoo! partnership put up significant barriers to a Microsoft buyout – barriers that no longer remain. Yahoo!’s stock price finished up today despite the DOW plunging 486 points, likely due to investor speculation and hopes for renewed buyout potential. We’ll see how this plays out, but I’m confident that Microsoft execs are talking about this situation as I type. Tic toc. Tic toc. Time will tell if Microsoft will come back to the table. In the meantime, Google continues to expand their search dominance.

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