Google Abandons Ad Deal with Yahoo

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    In a blog post, Google said that pressing ahead with the agreement "risked not only a protracted legal battle but also damage to relationships with valued partners."

    Google Inc. is abandoning a planned advertising partnership with Yahoo Inc. in the face of a looming antitrust challenge by the government.

    In a blog post, Google said that pressing ahead with the agreement " risked not only a protracted legal battle but also damage to relationships with valued partners."

    The deal, first announced in June, would have allowed Google to sell some of the online advertisements displayed alongside search results on Yahoo's site.

    Google's retreat is a major setback for a beleaguered Yahoo. It had been counting on the deal to boost its revenue and placate shareholders still incensed by management's decision to reject a $47.5 billion takeover bid from Microsoft Corp. nearly six months ago.