When the two companies announced their blockbuster ad deal in June, they said that they would wait three and a half months before putting it in place, giving regulators a chance to review it. The companies have until the end of next week to walk away before the contract takes hold and Yahoo begins importing a certain amount of ads from its larger rival to place along its own search results pages.

Now, as the self-imposed moratorium draws to a close, and on news that the Department of Justice had hired renowned antitrust litigator Sandy Litvack -- perhaps to pursue a lawsuit to block the deal -- the past week has seen a surge in lobbying from concerned parties on both sides of the matter.

Most recently, Yahoo (NASDAQ: YHOO) President Sue Decker broke the company's long public silence on the issue in a company blog post. Writing under the headline, "Myth-busting and the Yahoo-Google Agreement," Decker took aim at opponents' principal objections, such as the contention that the deal would see Yahoo slowly exit the search market by ceding its advertising business to Google, with the ultimate effect of raising prices for advertisers.

"You may have heard that the agreement gives Google control over 90 percent of search advertising," Decker wrote. "That's just plain wrong."

Decker repeated her contention that the nonexclusive Google (NASDAQ: GOOG) deal is simply a way of "backfilling" search queries with relevant ads that Yahoo doesn't have in its network. The idea is that with millions Yahoo users making so many search queries, it is simply not possible for any one company to maintain a large enough repository of ads to make a relevant match with every query.

"Not even Google," she wrote.

"The core idea is limited use of Google ads to deliver more value from our [search results pages] and other inventory in circumstances where we aren't delivering the best advertiser value today, and then to use resources gained by that strategy to accelerate our investments in the technologies and marketplaces of the future."

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To Microsoft, that idea sounds a little disingenuous. A company spokesman declined to comment for this story, saying that the testimony of Brad Smith, Microsoft's general counsel, before a Senate subcommittee earlier this year still reflected the company's position. Smith testified that any form of deal between Google, which commands somewhere around 70 percent of the search market, and its nearest competitor would be patently illegal on antitrust grounds.

Mounting rhetoric

The stakes in the debate are high: Yahoo expects to rake in an additional $800 million in annual revenue and Google would certainly expand its own formidable search-revenue stream. Microsoft (NASDAQ: MSFT) -- a committed opponent of the deal -- has warned that an alliance of the two leading players in search advertising would bring the market dangerously close to a monopoly.

Of course, Yahoo's ad deal with Google also comes on the heels of its protracted rebuff of Microsoft's takeover bid, a gambit Microsoft made in the interest of creating a viable competitor to Google in search advertising.

So far, Microsoft's position has been to encourage regulatory authorities to step in to halt the companies' work together. Google and Yahoo's partnership has been under a formal antitrust review by the DoJ since shortly after it was signed. In the following months, regulators in several states and Canada have opened their own investigations, as have antitrust authorities in Europe, though the ad partnership would only apply to Yahoo's sites in North America.

Page 2: Lawmakers weigh in

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