Justice delves into Google-Yahoo deal for antitrust signs

SAN FRANCISCO -- Yahoo's online ad partnership with Google could lead to a showdown with the Justice Department, which has hired an antitrust lawyer to determine if it is legal.

Sanford Litvack, chief of the Justice Department's antitrust division during the Carter administration, is reviewing evidence in what could become an antitrust case against the partnership, The Wall Street Journal reported Tuesday based on unnamed sources. USA TODAY confirmed the report.

A Justice Department spokeswoman declined to comment.

A spokesman for Microsoft, which has strongly opposed the deal in testimony before Congress, declined to comment.

But industry consultant Scott Cleland, president of Precursor, says Litvack's hiring — coupled with opposition from a group of major advertisers — signals "a very serious investigation. … It puts it in the league of the (DOJ investigations of) Microsoft."

The Association of National Advertisers, a trade group whose members include major advertisers such as Coca-Cola and General Motors, fired off a letter to Justice last week, calling the deal bad for advertisers and recommending it be blocked.

"This deal is about price fixing," says Cleland, noting that Google and Yahoo command 85% of the U.S. online search market, 90% of search advertising revenue and 99% of those profits.

The Google partnership is a cornerstone in Yahoo's long-term business strategy after it rebuffed a $47.5 billion takeover offer by Microsoft, worth $33 a share.

Yahoo is counting on Google's superior technology for identifying moneymaking ads to boost its annual revenue by about $800 million.

The partnership is set to go into effect in October. But a regulatory challenge could delay the deal until next year.

Google had to wait 11 months before getting the government's OK to complete its $3.2 billion acquisition of online ad service DoubleClick this year. Yahoo shares fell 68 cents to $17.58.