Google Inc. backed out its advertising agreement with Yahoo Inc. Wednesday, as the Department of Justice notified the search giant that it planned to file a lawsuit to block the deal.

"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," Google's Chief Legal Officer David Drummond wrote on the company's blog.

In a statement, Yahoo said it "continues to believe in the benefits of the agreement and is disappointed that Google has elected to withdraw from the agreement rather than defend it in court."