Justice to review Google-Yahoo search-ad deal

The U.S. Justice Department is reviewing Google's agreement to supply search-advertising links to rival Yahoo, at least the second time in a year that a Google deal has drawn federal scrutiny.

Google, the owner of the most popular search engine, informed the agency of the program before starting the two-week trial and responded to its questions, company spokesman Adam Kovacevich said Thursday in an e-mailed statement. He didn't say whether the department is conducting a formal probe of the matter.

Last year, the Federal Trade Commission investigated Google's proposed $3.1 billion takeover of Internet advertising company DoubleClick to determine whether the purchase was anti-competitive. The commission approved the deal in December. European Union antitrust officials gave their consent last month.

Yahoo, which rejected a $31-a-share takeover offer from Microsoft in February, could boost sales by using Google's search advertising, which commands higher fees. Yahoo Chief Executive Officer Jerry Yang is seeking a higher price from Microsoft by showing that the company can grow independently.

The U.S. Senate Judiciary Committee would examine any formal partnership between Google and Yahoo, said Chairman Herb Kohl, D-Wis., this month. After Google and Yahoo announced the trial, Microsoft warned that a partnership between the companies would hurt competition in the market.

Reuters reported Wednesday that the Justice Department is investigating Yahoo's agreement to run some Internet search ads from Google.

Yahoo, whose search engine trails only Google's in popularity, also informed the Justice Department of the test and gave the agency information, spokeswoman Tracy Schmaler said.

The test of Google's technology won't necessarily result in a long-term partnership, Yahoo said earlier this month.

Yahoo reported its first quarterly profit increase in more than two years Tuesday, and its forecast for the current three-month period met analysts' estimates. Microsoft CEO Steve Ballmer said Wednesday at a conference in Milan that he wouldn't raise the offer.

Ballmer threatened on April 5 to nominate an alternate slate of board members and possibly lower his bid if Yahoo failed to agree to terms by April 26.

Justice Department spokeswoman Gina Talamona declined to comment. After Microsoft announced its offer in January, Talamona said the department was "interested" in reviewing the antitrust implications of that deal.