Mountain View (CA) – Google today said that it has pulled the plug on a proposed ad deal with Yahoo, because of ongoing concerns from “government regulators and some advertisers”, which could have damaged “relationships with valued partners” and carried the risk of a “protracted legal battle”.

One of the most significant proposed changes in today’s advertising landscape has been called off as Google and yahoo announced the two companies will be going separate ways.   

“After four months of review, including discussions of various possible changes to the agreement, it's clear that government regulators and some advertisers continue to have concerns about the agreement. Pressing ahead risked not only a protracted legal battle but also damage to relationships with valued partners. That wouldn't have been in the long-term interests of Google or our users, so we have decided to end the agreement,” wrote David Drummond, senior vice president of corporate development at Google and chief legal officer for the company in a blog post.

The executive said that Google was “disappointed” by the development as the company believed that “the agreement would have been good for publishers, advertisers, and users -- as well, of course, for Yahoo! and Google” since Yahoo would have been able to display more relevant ads, especially on places that have few or no ads at this time. “Better ads are more useful for users, more efficient for advertisers, and more valuable for publishers,” Drummond wrote.

Google and Yahoo announced their advertising agreement back in June . “We're of course disappointed that this deal won't be moving ahead,” Drummond stated. “But we're not going to let the prospect of a lengthy legal battle distract us from our core mission.” He described that core mission as “creating useful products for our users and partners.”