HitChrome

Google and Yahoo look all set to drop their proposed ad alliance and this could happen as early as next week as early as next week because of antitrust objections by the Justice Department, the Wall Street Journal reported Friday.

Google is considering pulling out of the deal because it doesn’t want to accept the conditions the government might require to avoid harm to competition, the sources said.

The officials from the two companies met with regulators and appeared to be unwilling to make the compromises needed to satisfy Justice Department concerns that their combined power would overwhelm the online advertising market.

The deal was announced in June and proposed that Google start selling its search ads throughout Yahoo’s US properties.

Needless to say that the demise of the plan would represent another tough blow for Yahoo, which had hoped that the tie-up with Google would help it boost revenues after it rejected a 47.5-billion-dollar takeover bid from Microsoft. This upcoming collapse of the planned venture between the two biggest online advertising companies would deprive Yahoo of as much as 450 million dollars in operating cash flow over a year, according to estimates. What’s Yahoo upto next?