Page last updated at 08:22 GMT, Wednesday, 2 July 2008 09:22 UK

Google Yahoo ad deal faces probe

Yahoo office
The Google Yahoo deal raises fears of a monopoly in search advertising

A formal antitrust investigation into a deal struck between Yahoo and Google over search advertising is set to be launched by the US Justice Department.

The Washington Post said investigators will also demand documents from other large internet and media companies.

Together Google and Yahoo claim nearly 80% of the web search market and agreed to give antitrust authorities 100 days to look at the deal before going ahead.

Yahoo had called it an $800 million (£400m) annual revenue opportunity.

It's now thought that a formal investigation could signal that the Justice Department may have found some cause for concern with the partnership which would allow Google to provide some search advertising for Yahoo.

Lawyers familiar with similar investigations told the Washington Post that the kind of legal requests being issued by the Justice department - "civil investigative demands"- are not used for routine matters.

"It doesn't mean they have drawn any conclusions," Peter Guryan told the Post. He is a partner with law firm Fried Frank and formerly an antitrust lawyer in the Justice Department. But "it is a significant step beyond a request for voluntary information"?

"It demonstrates that the DOJ clearly has questions."

There has been no comment from either Google or Yahoo.

We all suffer

There has been concern by critics that a Google and Yahoo pairing could result in a monopoly in internet advertising if the agreement is given the go ahead.

Recently a coalition of 16 American civil rights and rural advocacy bodies called on regulators to investigate any online advertising and search partnership between the two companies.

Gary Flowers of the Black Leadership Forum told the BBC at the time "We all suffer in such mega mergers."

In a letter to the Justice Department he and the rest of the coalition argued that Yahoo and Google combined would result in "a possible future in which no content could be seamlessly accessed without Google's permission."

Politicians were also wary of the pact and heads of key sub committees in the House of Representatives and the Senate reiterated their intentions to look into the arrangement.

Last month Yahoo chief executive Jerry Yang visited Washington to allay fears that the partnership would impact competition within the online search advertising industry.

The Google Yahoo collaboration does not need up front approval from the US antitrust authorities as the two companies are not merging.

However, the government could challenge the deal in court if it came to the conclusion that it would restrain competition between them.


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