Google, Yahoo! May Scrap Ad Deal: Report

Google(GOOG Quote) and Yahoo!(YHOO Quote) are considering walking away as early as next week from the possible formation of a Web-advertising partnership, according to a published report.

The two companies met Thursday with the Justice Department, part of a series of meetings to address the concerns of regulators, and there are signs they are unwilling to make compromises to address the Justice Department's objections, the Wall Street Journal reports.

A Google spokesman said the company continues to have "cooperative discussions with the Department of Justice about this arrangement," according to the newspaper. A Yahoo! spokeswoman said discussions with the Justice Department are "ongoing," adding, "we believe strongly that this agreement will strengthen Yahoo!'s competitive position," the Journal reports.

The partnership, first announced in June, would allow Yahoo! to display search ads sold by Google and take a cut of the revenue. The alliance has drawn criticism that it would give Google too much clout in online ads, the Journal reports.

Google has begun thinking about scrapping the deal as talks with the Justice haven't progressed. One sticking point, the newspaper reports, has been the department's discussion about having the companies sign a consent decree stating the terms of the partnership. That would subject their compliance to continuing oversight by a judge.