DoJ Scrutinizing Yahoo’s Microsoft Deal

Microsoft and Yahoo confirmed Friday that the U.S. Department of Justice (DoJ) has begun the process of examining whether the two companies’ deal to basically gang up to go after Google’s dominant share of the search market should be given the green light.

The scrutiny has been expected ever since Microsoft (NASDAQ: MSFT) and Yahoo (NASDAQ: YHOO) announced on July 29 that they would collaborate to take on search giant Google (NASDAQ: GOOG).

Antitrust approval is crucial to making the deal work.

“We received a request for additional information about the agreement earlier this week as expected,” Jack Evans, a Microsoft spokesperson, told in an e-mail. “We’ve said we anticipated that this deal will be closely reviewed and we are hopeful it will be approved by early 2010,” he added.

A Yahoo spokesperson concurred.

“Yahoo and Microsoft are cooperating fully with the Justice Department and firmly believe that the information they will be providing will confirm that this deal is not only good for both companies, but it is also good for advertisers, good for publishers, and good for consumers,” the spokesperson said in an e-mail to

Under the terms of the deal, number three search competitor Microsoft will provide its Bing search engine to number two competitor Yahoo’s sites and share in the advertising revenues. The deal will run for 10 years and create a much stronger second place competitor to market leader Google.

According to Web analytics firm comScore, Google had 64.7 percent of the U.S. search market in July. Yahoo came in second with 19.3 percent, and Microsoft’s Bing garnered 8.9 percent, for a combined total of 28.2 percent.

Although that doesn’t make a combined Yahoo and Microsoft presence anywhere close to pulling down Google, it does make a stronger second place player than the two companies’ separate search market share.

Still, the deal is not expected to draw the ire of the DoJ or of advertisers the way a proposed deal between Yahoo and Google did last fall. That eventually led to Google and Yahoo abandoning their quest due to antitrust concerns last fall.

That deal was a response to Microsoft’s failed hostile bid in 2008 to buy Yahoo outright — a bid that ultimately yielded nothing but enmity between the two companies’ leadership. Eventually, that also led to Yahoo’s board bringing in a new CEO, Carol Bartz, who was previously CEO of AutoDesk, maker of AutoCAD.

Microsoft CEO Steve Ballmer, now with much scaled down aims, kept after a potential ads and search collaboration, finally announcing the deal in July.

A spokesperson for the DoJ said she could not comment regarding the proposed deal.

Additionally, a spokesperson for Google could not be contacted in time for publication.

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