Due to objections of anti-trust regulators, Google Inc. announced on Wednesday that it has pulled out of its advertising partnership with Yahoo.

The retreat represented another setback for Yahoo, which had been counting on the Google deal to boost its annual revenue by US$800 million and placate shareholders still incensed by management's decision to reject a 47.5-billion-dollar takeover bid from Microsoft Corp. nearly six months ago.

Anti-trust regulators had tried to block the partnership for fear that the alliance would give Google too much power over on-line commerce.

The strong objection prompted Google's attempt to abandon its effort for the partnership, Google sources said.

Google's management agreed in June to the Yahoo partnership, a move that increases the government's scrutiny of Google's market power. Even though it is now walking away empty-handed, Google figures to remain in regulators' sights as it tries to expand.

"We're of course disappointed that this deal won't be moving ahead," David Drummond, Google's chief legal officer, wrote on a company blog. "But we're not going to let the prospect of a lengthy legal battle distract us from our core mission. That would be like trying to drive down the road of innovation with the parking brake on."

"For the first time, Google has run into real opposition to its marketplace goals," said Jeff Chester, executive director of the Center for Digital Democracy, a consumer advocacy group. "Google is aware that its aggressive moves in the on-line advertising business are potentially contributing to damaging its brand. The perception of Google has changed."

Without Google's help, Yahoo now may feel more pressure to renew talks with Microsoft and ultimately sell for a price well below the 33-dollar per share that Microsoft offered in May. Yahoo shares traded Wednesday morning at just 13.67 dollars, up 2.4 percent on the day.

(Xinhua News Agency November 6, 2008)