Google and Yahoo are reportedly close to walking away from their search ad deal after meetings with the Department of Justice.
According to the Wall Street Journal:
The two companies met Thursday with the Justice Department, part of a series of meetings to address the concerns of regulators. While the parties may agree to continue the talks -- or they could reach a resolution -- there are signs they are unwilling to make compromises to address the Justice Department's objections.
Is this story (Techmeme), which Kara Swisher notes is hedged out the wazoo, on target or some game of Google chicken?
The answer is probably a little of both, but there's another reason this Google-Yahoo search ad affair is toast: Google has already accomplished its mission. Remember back a few months ago when Google became the alleged savior of Yahoo? Why did that happen? Microsoft was trying to buy Yahoo. Google--and Yahoo for that matter--wanted to derail Steve Ballmer & Co. and the search giant was happy to oblige. And Yahoo in arguably the dumbest move in recent business history turned down Microsoft's $33 a share offer. For Yahoo shares that blunder was $20 ago.
Also see: Yahoo: What happens if Google deal doesn’t go through?
Bottom line: Google has already cast enough doubt about Yahoo, which appears to need its biggest rival now more than ever. Microsoft is out of the picture (but never say never). Yahoo is fumbling around with AOL in a prospective marriage based on the theory that two turds can become an apple pie. And Google doesn't need this Yahoo deal anyway.
In the end you're left with this question: Why wouldn't Google walk away? There's no need to taunt the DOJ. The Yahoo deal won't materially affect Google's earnings and revenue. And Google's search rivals--Microsoft and Yahoo--are both weaker today than they were a few months ago. Google's job is done. Back away from the Yahoo deal gracefully.