In a last-ditch effort to win U.S. antitrust approval, Yahoo and Google have drastically scaled back the scope of their search advertising deal.

Here’s what our friends at The Rollins Financial Blog have to say about what would be one of the biggest deals in internet history:

“The move comes after Google appeared to be on the verge of walking away from the partnership, which was announced in June to foil Microsoft’s takeover attempt of Yahoo. The deal has since drawn scrutiny from U.S. regulators amid a growing chorus of criticism from advertisers.

The two Internet companies have submitted a reworked proposal to the U.S. Department of Justice that shortens their partnership to just two years from 10 years, the source said.

The revised deal also caps the percentage of search revenue that Yahoo can collect from Google at no more than 25%, and lets Google advertisers opt out of being placed on Yahoo, the source said.

Yahoo spokeswoman Tracy Schmaler said in an emailed statement the company continues to work with the Justice Department and discussions are ongoing.

Google spokesman Adam Kovacevich declined to discuss the details of the process.

Analysts said the new terms could help the deal get past regulators, but questioned whether such a limited partnership would be financially lucrative to Yahoo, which is a distant No. 2 to Google in the web search market.”

Tuesday, November 4th, 2008, 1:06 pm   |   Google, Yahoo  |  RSS feed |  Respond  |  Trackback