My finance view

WASHINGTON — Facing a legal battle that would have illuminated its widening market power, Google Inc. turned its back on struggling rival Yahoo Inc. and pulled the plug on an Internet advertising partnership that had been conceived to keep Yahoo out of Microsoft Corp.’s clutches.

The retreat announced Wednesday represented another setback for Yahoo, which had been counting on the Google deal to boost its finances and placate shareholders still incensed by management’s decision to reject a $47.5 billion takeover bid from Microsoft six months ago.

Google backed off to avoid a challenge from the Justice Department, which said it would sue to block the deal to preserve competition in Internet advertising companies making payday loans. Attorneys general from 15 states and Canada’s antitrust regulators also loomed as potential adversaries.

Without Google’s help, Yahoo now might feel more pressure to renew talks with Microsoft and ultimately sell itself for much less than the $33 per share that Microsoft offered in May. Yahoo closed Wednesday at $13.92, gaining more than 4 percent in a move reflecting investor hopes that Microsoft might renew its pursuit.

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