Google and Yahoo fling earns Justice Department's evil eye

Schmidt's life raft also probed

By Dan Goodin in San Francisco • Get more from this author

Posted in Financial News, 23rd April 2008 22:59 GMT

Yahoo's recent dalliance with Google's search advertising business may be getting a little adult supervision from US trust busters, who are concerned it could violate antitrust law.

According to Reuters, Justice Department chaperons are investigating Yahoo's test of Google's ad engine. Recently, the two companies signaled their limited, two-week fling could blossom into a full-fledged partnership.

These long-range plans appear to be cause for concern at the Justice Department, and it's not hard to see why. Google and Yahoo return 63 per cent and 17 per cent of the world's searches, respectively. If Yahoo expanded the partnership to cover all its searches (it's less than 3 percent now), Google's ad engine would accompany 80 percent of all search results.

Justice department officials are also looking in to a telephone call in which Google CEO Eric Schmidt offered Yahoo counterpart Jerry Yang help in rebuffing Microsoft's $44.6bn marriage proposal. Microsoft is none too happy about the alliance and has recently threatened a proxy fight if Yang and company don't comply.

The Justice Department scrutiny doesn't seem to have taken anyone by surprise at Google and Yahoo. Both companies gave antitrust officials a heads-up about their plans before ever going forward with the test. ®

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