German officials told The Guardian co-operating with the French government had been tricky and they were not convinced it would ever compete effectively with the likes of Google and Yahoo!.
Germany will now develop its own search engine called Theseus while France is expected to continue with the Quaero project.
Why am I not astonished for a second, especially about co-operating with the French government? Let's hope we (France) bury this public-money-wasting-monster after we get rid of his originator later this year.
P.S. and reading between the lines in this article, it's clear that this is just a disguised public founding for Exalead and Thomson, administered by yet another French administration (Aii - pronounce "aïe", i.e. "ouch!" in french) for yet another layer of red tape and politics. No mystery why the Germans withdrew.