Google and Yahoo face DoJ probe

 

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By Reuters

Posted on 2 Jul 2008 at 14:21

The US Justice Department has opened a formal antitrust investigation into the deal between Google and Yahoo to share advertising revenue.

Investigators are set to demand documents not only from Google and Yahoo, but also from other large companies in the internet and media industries, the Washington Post reported, citing sources who spoke on condition of anonymity.

Archrival Google, with more than 60% of the web search market, and Yahoo, with 16.6%, agreed last month on an advertising partnership under which Yahoo will let Google put search ads on its site in a deal Yahoo called an $800 million annual revenue opportunity.

Google and Yahoo are ranked number one and two in search respectively.

When the advertising pact was announced on 12 June, the companies said they would give antitrust authorities 100 days to look at the deal before beginning it.

But a formal investigation signals the Justice Department may have found some cause for concern. Yahoo has expressed confidence that the deal would be good for competition.

"There is nothing unexpected in the review of this arrangement as structured by the parties and Department of Justice officials," Yahoo said in a statement.

Lawyers familiar with similar investigations said that the kind of legal requests being issued by the Justice Department in this case are not used for routine matters.

The Google-Yahoo collaboration does not need up-front approval from US antitrust authorities since the two companies are not merging. However, the government could challenge the arrangement in court if it concluded that it would restrain competition between them.