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Yahoo! Caught in $2.7 Billion Mexican Stand-Off

Something of a surprise as Yahoo is hit with a $2.7 billion judgement over an old business deal in Mexico. Yahoo itself of course is stating that the case is entirely without merit:

Yahoo! Inc. (NASDAQ: YHOO) today reported that the 49th Civil Court of the Federal District of Mexico City has entered a non-final judgment of U.S. $2.7 billion against Yahoo! Inc. and Yahoo de Mexico, S.A. de C.V. in a lawsuit brought by plaintiffs Worldwide Directories S.A. de C.V. and Ideas Interactivas, S.A. de C.V. Yahoo! believes the plaintiffs’ claims are without merit and will vigorously pursue all appeals. The plaintiffs alleged claims of breach of contract, breach of promise, and lost profits arising from contracts related to a yellow pages listings service.

The deal itself was to produce something like a book form of a business version of the Yahoo directory:

The idea was to augment its online local business search with printed book. Yahoo hoped that the two-pronged strategy would let it compete with Google. The books would include maps, business and landmark listings, and a catalogue of offers and discounts. There would be flexible, low-cost advertising options in Yahoo! Páginas Útiles, which was slated for an initial circulation of 800,000 free copies followed by a second print run of 1.7 million units according to a April 2003 article from Mexican website Noticias Dot.

I’m not sure The Times has it right here:

A Mexican court has fined Yahoo! $2.7 billion over a yellow pages listings dispute.

This isn’t a fine as it’s a civil case. It is, rather, damages. Yes, that’s correct, it’s a damages judgement:

A Mexican court has ruled Yahoo in breach of a contract with a former partner, Ideas Interactivas, and hit it with a $2.7 billion judgment, Yahoo announced.

This is something of a problem of course: the amount is larger than Yahoo’s total quarterly income, let alone earnings…

Read more: Tim Worstall, Forbes


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