In a corporate emulation of dumping a lover by sending a text message to end the relationship, a method much favoured by 'C-List" celebs, Google has taken the coward's way of terminating its much-vaunted search-engine advertising deal with Yahoo! and announced it to its putative partner and the rest of the world in, of all things, a blog!
The Cookie Monster says it is jilting its would-be mate to avoid what it describes as "a protracted legal battle" with US regulators who have been examining the proposed alliance under the provisions of America's anti-trust legislation.
Google has left Yahoo! if not exactly at the altar then certainly halfway up the aisle after getting cold feet brought on by four months of protracted negotiations with the US Department of Justice that came to naught.
The Google blog added that continuing with the deal would "also damage relationships with valued partners and that would not be in the long-term interests of Google or our users, so we have decided to end the agreement."
It is hard to imagine where Yahoo! might go now and even how long it might be able to continue to exist as an independent entity. It had bet its shirt and future on the tie-up whereby Google was to provide Yahoo! and its various partner websites with search advertising across the entirety of North America. And now Microsoft, whose advances Yahoo! so determinedly spurned, is lurking in the vestry.
Yahoo's star has been on the wane for some time and, back in June, the company agreed to get into bed with Google as the only way to fend-off the persistent but unwanted attentions (unwanted by some anyway) of Microsoft and to benefit from the additional revenues (estimated at some US$800 million a year) that would accrue as a result of the marriage.
However, advertisers came out strongly against the alliance and lobbied the US authorities to ban it on the grounds that it was anti-competitive and would inevitably result in increased prices for search ads.
For its part, Yahoo! last night tried to reassure its investors and customers by saying the jilting will have "minimal impact on our strategy". And if you believe that.....
However, the price of Yahoo's shares rose dramatically as the rumour that the company's CEO, Jerry Yang, had resigned circulated and gained momentum. The shares fell back later when the scutttlebutt was denied, but still managed to bob around at the $14.37 point - up by about seven per cent and higher than they have been in a long time. Nonetheless, Mr.
Yang's position must be even more precarious now as the long shadow of Microsoft once more falls across the the broad and normally sunny pastures of the Yahoo! campus.
Yahoo! shareholders were very angry when the company's top management rejected Microsoft's $47.5 billion takeover bid that valued Yahoo! shares at $33 each. They will be even angrier now. Any renewed bid that Microsoft might make will be nowhere near as generous as the earlier one. Yahoo's shares have lost more than 50 per cent of their value since Jerry Yang's second coming in June last year.
Corporate raider Carl Icahn is now a significant shareholder in Yahoo and was very much in favour of accepting the earlier Microsoft bid and releasing cash to embattled stockholders. He is now worried that any renewed Microsoft bid will not be for the whole of Yahoo! but that MS will be selective and cherry-pick the parts of the business that it likes (such as the search engine itself) and leave the worthless rest to rot on the vine - as it were.
When he finally brought himself to comment on the day's events Mr. Yang did nothing to allay shareholder fears that the company may not go to Microsoft at a knock-down price. He said, "To this day, I would say that the best thing for Microsoft to do would be to buy Yahoo!. I don't think that is a bad idea at all."
How things change. That's not what he was saying a few months ago. But that was then and this is now.
Yang also seems to have been stung by blogs pointing out that the CEO has a rather well-developed ego and sense of self-worth. Indeed, many claim that his egotism prevented several lucrative commercial deals from being completed in the past. Referring to these allegations Jerry Yang commented, "People who know me know I don't have an ego about remaining independent."
It is believed that Yahoo might now try to tie-up with AOL, the logic being that two tattered and battered former stars of the internet firmament can combine to form one strong company - a forlorn hope in reality. What's the betting that Mr. Yang will soon be exiting the Yahoo! executive suite for a second - and final- time?
And as for Google? Well, the Teflon is scratched and a few bits of mud are sticking. The company certainly doesn't come out of this unsullied.
Jeff Chester, the executive director of the US consumer advocacy body, the Centre for Digital Democracy said, "For the first time ever, Google has run into real opposition to its goals. Google is aware that its aggressive moves in the online advertising business are contributing to damaging its brand. The public perception of Google has changed."
In other words, Google isn't bulletproof and the Cookie Monster can't walk on water after all.
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