Symbian smartphone: Google Cancels Plans For Ad Deal with Yahoo

Google Inc pulled out of a search advertising partnership with Yahoo Inc due to regulatory objections, causing Yahoo shares to rise as investors hoped the move could lead to a resumption of deal talks with Microsoft Corp.

Yahoo denied rumours it was in talks to sell itself to Microsoft for between $17 and $19 a share but its shares were over 8 percent higher. "Not true" said Yahoo spokeswoman Tracy Schmaler, who also denied a rumour that Yahoo CEO Jerry Yang was on his way out.

The U.S. Justice Department said on Wednesday it had told Google it planned to file a lawsuit to block the deal, under which Google would have placed its more lucrative ads on Yahoo searches.

"Had the companies implemented their arrangement, Yahoo's competition likely would have been blunted immediately with respect to the search pages that Yahoo chose to fill with ads sold by Google rather than its own ads," the government said.

Google and Yahoo delayed the implementation of their ad partnership to allow the Justice Department to scrutinize it for antitrust issues.

"After four months of review, including discussions of various possible changes to the agreement, it's clear that government regulators and some advertisers continue to have concerns about the agreement," the Google legal officer, David Drummond, said in his Internet posting.