Justice Department Brings Google (GOOG) To Its Knees

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Bloomberg is reporting that Google (GOOG) will delay its deal to sell search advertising for Yahoo! (YHOO) "until U.S. regulators can wrap up an investigation into the deal." Since The Justice Department is handling the work, that could be some time.

The news also begs the question of whether Google will make a similar concession to EU antitrust authorities and those in Canada who are also looking over the arrangement with Yahoo!.

The decision is only a modest blow to Google. Its piece of the Yahoo! advertising brokerage deal is likely to be an extremely small piece of its revenue going forward.

For Yahoo! is is another matter. The partnership with Google was part of the portal company board’s list of excuses for not selling out to Microsoft (MSFT). The news makes Carl Icahn, who traded board seats for laying off Yahoo! management, look like a fool. First, Redmond left the table, and now Google is essentially admitting that it may be blocked from acting as a Yahoo! sales agent.

Yahoo! hit a five-year low this week. Expect that to get worse when the market reopens.

Douglas A. McIntyre