Yahoo to Pay $250 Million to Google For Break Up
Yahoo has agreed to pay Google a break up fee of $250 million if the partnership falls apart within the first two years.
“If the Services Agreement is terminated by either party within 24 months … Yahoo! is required to pay to Google the sum of $250,000,000…”
It is indeed a matter of speculation why Yahoo could not negotiate a better deal. Yahoo anticipates a revenue of $250-$450 million in operating cash flow in the first 12 months following implementation. In terms of profit this deal can actually lead to a loss for Yahoo.
This deal would also be a big step for Google in obtaining virtual monopoly in the search advertising market and Yahoo would become completely dependent on Google for search advertising revenue.