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Would Yahoo Be Smart To Pursue A Google Handout Now?

Posted on 11 May 2008 by Alex

It didn’t take very long for Google-Yahoo dealings in the form of a search advertising trial partnership to appear to US Department of Justice like a great big juicy red flag. The two giants looked to be all but asking for some good old anti-trust scrutiny and speculation. The attention has only been compounded by their cozy moment last month, when the two Web giants started to hold hands while Yahoo was very much in the process of fending off stubborn advances by Microsoft for a buyout. Of course, as we’ve all been made well aware, Microsoft withdrew its bid. Yet Google is still quite interested in continue to talk with Yahoo, as our own Stan Schroeder explained earlier this week.

Perhaps they continue to converse about the possibility of some kind of extension to brief rendezvous because it did in fact turned out quite good for them both. Good for Google, because, well, it’s another big, lucrative deal for Mountain View to milk with greedy abandon, and good for Yahoo because shareholders expect to see better numbers to justify the company’s stubborn refusal of a purchase, and it seemingly delivered, albeit temporarily. (And hey, let’s face it, it’ll certainly take more than a week or two to offer a real semblance of substantive growth - above and beyond what Yahoo has been able to accomplish all its own with its lackluster Panama framework.)

Be that as it may, the number of parties looking at the potential for more business between Google and Yahoo now involve entities far beyond the DOJ and various pro-competition pundits. Strangely so, even. According to the AP, “a coalition of 16 civil rights and rural advocacy groups, including the Black Leadership Forum and the League of Rural Voters…urged federal regulators to investigate the potential combination.” Even the American Corn Growers’ Association signed the collective request for an investigation if Google and Yahoo are to propose some type of joint venture. Which is just…wow. The folks working the high-fructose, corn-on-cob, and ethanol angles are suspicious of Google-Yahoo ties. That must say something. I don’t know what, precisely. But it can’t be good.

Yahoo is certainly in a peculiar place at the moment. It has not seen its stock price plummet following Microsoft’s abandonment of its bid, as many suspected it would, including myself. (Going into the weekend, it sits a few cents shy of $26, which is roughly $7 more than where it lay prior to Microsoft’s glorious $44.6B public offer.) But that may hinge on a deal with Google. Which, given anti-competitive concerns, likely wouldn’t be granted by regulators.

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