From a Weisel report emailed to me just now:
On Monday (11/3) after the close, The Wall Street Journal reported that Google and Yahoo have submitted to the Department of Justice a revised version of their proposed search agreement. While we see little legal reasoning behind blocking the deal, we believe the DOJ is basically saying that Yahoo can’t be trusted to do the right thing for its business over the long term.
Shortened Duration: The reported revised plan shortens the partnership from 10 years to 2 years, forcing Yahoo to avoid lowering its search monetization capability if the company can’t rely on Google for a decade.
Cap on Outsourced Revenue: The revised deal would also place caps on the revenue that Yahoo can generate from the partnership to 25% of Yahoo’s search revenues (or around $1bn annually based on our 2008 estimates). Given Yahoo had originally identified search revenues of $800mn that would be addressable for Google suggests again that the DOJ would want to put fail safe measures in place to limit Yahoo from getting too aggressive and outsource beyond the tail keywords which it had previously highlighted.
Here is a Reuters piece:
Yahoo Inc and Google Inc have drastically scaled back the scope of their search advertising deal, a person close to the discussions said on Monday, in a last-ditch effort to win U.S. antitrust approval.
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 Corp’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.
Jerry and I sit down to talk on stage Weds.