FORTUNE — A proposed $35 billion merger of advertising giants Omnicom OMC and Publicis has collapsed, the Wall Street Journal reported late Thursday, sending shockwaves across the marketing industry.

The deal would have combined what are already two of the biggest advertising companies and create a colossus that would have dwarfed all peers in terms of revenue. Negotiations fell apart because of executive infighting, regulatory hurdles, and tax issues, the report said.

Where this leaves the two companies is unclear. But it is a major about-face for Maurice Lévy, of Publicis, and John Wren, from Omnicom, the two chief executives who had lauded the deal since proposing it last year. They had called it a “marriage of equals” and spoke of the benefits it would create including a greater client-base, tax advantages, and cost efficiencies. By combining forces, they hoped to upend the advertising industry, which has been steadily consolidating over time.

The deal would have combined some of the most venerable assets in the advertising and marketing sphere. Omnicom, based in New York, is home to ad agencies Goodby, Silverstein & Partners, and BBDO Worldwide along with public relations firms Fleishman-Hillard. Publicis, based in Paris, owns ad agencies Leo Burnett Worldwide and Saatchi & Saatchi, among others.

With the deal now scuttled, WPP, a rival to both companies, will remain the biggest in the industry as measured by billings.

MORE: Is a ‘merger of equals’ possible for Publicis and Omnicom?