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DOJ Continues Probe of Yahoo-Google Partnership

By Jeremy Kirk

July 02, 2008 — IDG News Service —

The U.S. Department of Justice is continuing its formal antitrust investigation into the advertising partnership between Yahoo and Google, according to a department spokeswoman.

On June 12, Yahoo said it would run advertisements supplied by Google alongside search query results, a four-year deal estimated to bring Yahoo up to US$800 million in revenue a year.

The Washington Post reported Wednesday that the DOJ had just opened a formal antitrust probe. However, DOJ spokeswoman Gina Talamona said the department has confirmed an ongoing investigation since June 16.

Yahoo and Google have been keenly aware of how their partnership might draw regulatory attention. In April, the two companies informed the DOJ of a planned two-week test of the advertising program, which was limited to U.S. traffic on yahoo.com and comprised no more than 3 percent of total search queries.

After reaching a larger agreement last month, the two companies said they would delay implementing the program for three and a half months pending a review by the DOJ. The DOJ said it was looking into the deal four days after the two companies announced that agreement.

The investigation means DOJ can ask questions of both companies, request documents and other material needed for its probe. It can also include the issuance of "civil investigative demands," a type of legal request for information.

Yahoo said the course of the investigation is proceeding as expected. "We cannot comment on the specific details of the process, but there is nothing unexpected in the review of this agreement as structured by the parties and Department of Justice officials," according to a statement issued by Yahoo.

"We are continuing to have cooperative discussions with the Department of Justice about this arrangement," Google said in a statement. "We are confident that the arrangement is beneficial to competition, but we are not going to discuss the details of the process."

The deal with Google, which already dominates text-based search advertising, was widely characterized as a move by Yahoo to deflect Microsoft's acquisition attempts.

(Grant Gross in Washington contributed to this report.)

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