Google Looking out for Google

Don’t expect to see Google Pay-Per-Click Ads on Yahoo search results anytime soon. Google announced earlier this week it was walking away from its advertising partnership with Yahoo.

A day later, Google chief executive Eric Schmidt said he believes the companies would have been successful had they chosen to defend the deal in court. According to The New York Times, Schmidt went on to state that:

We canceled the deal with about one hour to go before a lawsuit was going to be filed against our deal. We concluded after a lot of soul-searching that it was not in our best interest to go through a lengthy and costly trial which we believe we ultimately would have won.

Ultimately, Google wanted to avoid the possibility of damaging existing relationships with valued partners and users. While I agree with Google’s decision and plausible reasoning, I can’t help but wonder if this was Google’s plan all along. Let’s go back:

February 1, 2008 – Microsoft makes an unsolicited bid for Yahoo. Hearing this, Google steps in to support Yang’s independent mind-set, triggering a series of conversations between Google and Yahoo executives to see if Google can help Yahoo to remain independent. The ensuing advertising agreement signed in June was the culmination of those conversations.

Now, despite Google’s confidence in defending the deal, Google walks away following a bit of “soul-searching.”

I can’t help but wonder if this was Google’s plan all along. When you look at it, there’s only one clear winner: Google. Google helps kill any potential deal between Yahoo and Microsoft and Yahoo’s price per share drops below $14 and the company is left with no additional cash flow.

There is no doubt Mr. Yang welcomes a new Microsoft deal with open arms and while season 2 of A Microsoft-Yahoo Partnership may premiere soon, Google has and will continue to delay any potential agreement between the two.

In the end, Google has more time to grow search share, build its acquisitions roster and dominate the online realm, leaving Microsoft and Yahoo well behind.