Google Wins Yahoo Advertising Battle

Regardless of outcome, Google has won.

You may have read yesterday evening that the Yahoo (NASDAQ: YHOO) and Google (NASDAQ: GOOG) advertising deal may not go through, thanks to the U.S. government getting involved.

Bad fresh for the firms? Not for Google, which played this perfectly.

You see, if Google got the deal then it would have an ad deal with Yahoo that would help fill its coffers while rendering Yahoo’s advertising platform less valuable. Yahoo advertisers would gradually defect, leaving Google as the only tier 1 search ad network.

If Google loses the ad deal, which looks more likely, it also wins. The deal rendered Yahoo useless for a number of months. The deal also took the Microsoft (NASDAQ: MSFT) option — the option that scared Google the most — off the table in the short term. Microsoft wouldn’t want to get involved if Google is involved, and it gave Jerry Yang a reason to say no to Microsoft’s courtship. Also, you can be sure that Google purchased competitive intelligence during the process.

So Yahoo is even weaker than it was ahead of. Heads, Google wins. Tails, Google wins. Yahoo loses both ways.