Google has backed out of a partnership with Yahoo! that would have provided Yahoo! with access to Google's AdSense advertising programs. In a blog post, David Drummond, Google Senior Vice President, Corporate Development and Chief Legal Officer, cited fears of a lengthy legal battle as well as damage to relationships with valued partners as the reasons for withdrawing from the agreement.

Drummond stated that Google is disappointed that the deal will be scrapped. "We feel that the agreement would have been good for publishers, advertisers, and users--as well, of course, for Yahoo! and Google. It would have allowed Yahoo! (and its existing publisher partners) to show more relevant ads for queries that currently generate few or no advertisements. Better ads are more useful for users, more efficient for advertisers, and more valuable for publishers."

The two companies announced the plan to deliver ads to Yahoo!-based search queries last June, but competitors, including Microsoft, have asked antitrust regulators to block the deal, which they say is unfair. Just days ago, Google and Yahoo! offered to reduce the scope of the proposed advertising deal in hopes of avoiding an antitrust suit from the US Department of Justice (DOJ). However, the DOJ told the companies that the agreement between the companies accounting for 90 percent of each relevant market would likely harm competition in the markets for Internet search advertising and Internet search syndication and that if the companies pressed on with the deal, it would file an antitrust lawsuit to block the agreement.