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    Google Puts Escape Clause in Yahoo Deal

    By
    Roy Mark
    -
    June 13, 2008
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      Google is hedging its bets over the future of Yahoo in the proposed advertising deal between the two companies, according to a June 12 Yahoo filing with the Securities and Exchange Commission. The filing shows a $250 million kill fee obligation by Yahoo if ownership of the company changes within the next two years.

      Google can also bail out of the deal after 10 months if revenues don’t hit $83 million over a four-month period.

      According to the SEC filing, Google can ditch the deal if Yahoo does not continue to control at least 50 percent of the company’s voting power. In any transaction between Yahoo and Microsoft, Time Warner or News Corp., Yahoo must retain at least 65 percent of voting power or Google can bail.

      In the case of a “beneficial” ownership change, where a party does not own title but controls certain rights, the filing states Yahoo must retain 35 percent of voting control if the deal involves Time Warner or News Corp. If Microsoft gains beneficial control, Yahoo must retain 15 percent of voting power.

      The filing also spells out Yahoo’s ability to decide how to use Google ads.

      “Yahoo has sole discretion to choose which search queries to send to Google and is not obligated to send any minimum number of search queries,” the filing states. “Yahoo also has sole discretion to decide on which pages to display ads provided by Google through its … services.”

      With an eye to potential antitrust problems with the deal, the filing stresses that the Google and Yahoo arrangement is nonexclusive and “expressly provides that Yahoo is not prevented from implementing any other advertising, promotion or marketing service.”

      Omid Kordestani, senior vice president of global sales and business development at Google, wrote in a blog post June 12 that the agreement will put more relevant ads before users as they search the Web, with advertisers and publishers boosting their revenue.

      Avatar
      Roy Mark

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