The deal, estimated to boost Yahoo's revenue by up to $800m (£495m), was struck in July, but has languished in a Justice Department anti-trust investigation since.
Yahoo said that it "continues to believe" in the benefits of the agreement and "is disappointed that Google has elected to withdraw from the agreement rather than defend it" during the Justice Department's probe.
Google notified Yahoo of its refusal to move forward with the deal after the Justice Department said it would seek to block it, despite Yahoo's proposed revisions to the plan.
Earlier this week, Yahoo said the companies had agreed any revenue from the deal would not total more than 25% of Yahoo's total search revenue, and that Google advertisers could opt out of appearing on Yahoo.
Yahoo struck the Google deal at a time when investors were concerned over its future prospects, following its rejection of Microsoft's takeover advances earlier this year.
But Yahoo said the ending of the deal did not significantly impair its prospects. The company added: "While the implementation of the services agreement with Google would have enabled Yahoo to accelerate its investments in its top business priorities through an infusion of additional operating cash flow, this deal was incremental to Yahoo's product roadmap and does not change Yahoo's commitment to innovation and growth in search."
_1.jpg)
.jpg)
