Microsoft News Tracker

The Google-Yahoo advertising deal that was a relic of Yahoo’s defense against a Microsoft takeover has been abandoned because of an inability to satisfy the concerns of US regulators:

Google Inc. has scrapped its Internet advertising partnership with struggling rival Yahoo Inc., abandoning attempts to overcome the objections of antitrust regulators and customers who believed the alliance would give Google too much power over online commerce.

The retreat announced Wednesday represented another setback for Yahoo, which had been counting on the Google deal to boost its annual revenue by $800 million and placate shareholders still incensed by management’s decision to reject a $47.5 billion takeover bid from Microsoft Corp. six months ago.

Google backed off after the U.S. Justice Department said it would sue to block the Yahoo deal to preserve competition in the Internet’s rapidly growing advertising market.

“The arrangement likely would have denied consumers the benefits of competition — lower prices, better service and greater innovation,” said Thomas Barnett, an assistant attorney general who oversees the Justice Department’s antitrust division.

Without Google’s help, Yahoo now may feel more pressure to renew talks with Microsoft and ultimately sell for a price well below the $33 per share that Microsoft offered in May. Yahoo shares traded Wednesday morning at just $14.05, gaining 70 cents in a move reflecting investor hopes that Microsoft might renew its pursuit.

So will Microsoft try again at a much lower price? There are a lot of good buys in today’s depressed stock market, but is Yahoo one of them?

The USA’s Federal Communications Commission voted yesterday to allow unlicensed low-power use of "white spaces", the soon to be unused part of the radio frequency spectrum assign to analog TV. This had been requested by Google, Microsoft, and a group of other technological companies who envision it as the basis for national mobile broadband services. It was opposed by broadcasters and other parties who felt that unlicensed white space usage would interfere with their own spectrum usage.

So where’s the pony for Microsoft? Well, since Microsoft currently makes few devices itself, it seems mostly to be hiding in the general growth of the personal electronics industry that a white spaces "Wi-Fi on steroids" would enable. Per Microsoft’s Craig Mundie from before the FCC decision was made:

If the FCC votes in favor of the white spaces rule, Microsoft and other advocates will likely move to "make products as quickly as we possibly can."

He declined to say what those products might be. "There can’t really be a specific plan until there’s a specific ruling," Mundie said.

In a more general sense, however, Mundie speculated that white spaces will enable Microsoft to expand the reach of its Wi-Fi enabled products – from Windows-based laptops with Wi-Fi access to the Zune music sharing component and Windows Mobile.