Google has abandoned its advertising deal with Yahoo to avoid having a "protracted legal battle" with US regulators.
The deal involved Google providing some advertising around Yahoo's search results, and would have been worth around £495m a year to Yahoo.
The deal was originally announced in June, but it has faced anti-trust objections from Microsoft and web advertisers, who felt it potentially limited the search web ad space.
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Yahoo said its was "disappointed" that Google had chosen not to stand and fight for the deal.
Yahoo was using the deal with Google to help placate shareholders angry about the Yahoo board rejecting Microsoft's recent takeover offer.