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Google: Yahoo Deal On Track Despite Scrutiny

Google and Yahoo
Source: Reuters

Google, facing a U.S. Justice Department probe of its search-advertising partnership with Yahoo, will proceed with the agreement by early October, according to a Bloomberg report.

"We are going to move forward," Google's (NASDAQ: GOOG) CEO, Eric Schmidt, said in an interview with Bloomberg Television on Thursday in Denver.

"We are in the process of talking to the government. They've not indicated one way or the other how they're dealing with us," the news agency quoted Schmidt as saying.

Google, with more than 60 percent of the internet search market, and Yahoo (NASDAQ: YHOO) with 16.6 percent, agreed in June on an advertising partnership under which Yahoo will let Google put search ads on its site.

Little in the way of specifics have been disclosed on how the deal is structured. In a recent Security and Exchange Commission filing, Yahoo gave a glimpse into how the payment plan might operate, with Google compensating it with an undisclosed percentage of its ads each month, and providing a report detailing gross revenue from the ad sales and Yahoo's percentage.

While the revenue split remains unclear, the filing notes that Google may cancel the deal if gross revenue for four months drops below $83 million.

The deal has raised concerns that it will give Google too much power in the $65 billion online advertising market, and the U.S. Justice Department launched a formal antitrust investigation earlier this year. Additionally, More than a dozen states' attorneys general have since opened an inquiry into the matter.

"We always worry a little bit, but we think our arguments are pretty strong," Schmidt told Bloomberg.

Google was not immediately available for comment.

In addition to the antitrust concerns, Microsoft has raised the issue of consumer privacy, warning that its two rivals could pool their immense troves of consumer data, creating detailed profiles of millions of users.

In response to an earlier congressional inquiry into online privacy safeguards at dozens of Internet companies, Yahoo earlier this month announced that it would start giving users the choice of opting out of behavioral targeting on the Web sites it owns.