DOJ expands review of planned Microsoft-Yahoo agreement

Computerworld - The U.S. Department of Justice has asked Microsoft Corp. and Yahoo Inc. to hand over more information regarding their proposed search partnership.

A Microsoft spokesman confirmed in an e-mail to Computerworld today that the DOJ requested additional information, but added that it came as no surprise.

"As expected, we received additional request for information about the agreement earlier this week," wrote the spokesman, Jack Evans. "When the deal was announced, we said we anticipated a close review of the agreement given its scope, and we continue to be hopeful that it will close early next year."

Evans declined to disclose exactly what information the DOJ is looking for.

Nina Blackwell, a spokeswoman for Yahoo, said both companies are cooperating with federal regulators. "[We] firmly believe that the information [we] 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," she added.

Microsoft and Yahoo announced late in July that they had finalized negotiations on a deal that will have Microsoft's Bing search engine powering Yahoo's sites, while Yahoo sells premium search advertising services for both companies.

The partnership, which was a year-and-a-half in the making, is aimed at enabling the companies to take on search behemoth Google as a united force.

Microsoft officials contend that the deal with Yahoo will improve competition in the search market.

Matthew Cantor, a partner at Constantine Cannon LLP in New York and an experienced antitrust litigator, disagrees.

Cantor said last month that when Yahoo's own search tool disappears, only two major search engines will remain -- Google and Microsoft's Bing. He argues that since Yahoo will cease being a competitor in the search market, the DOJ is likely to say the Microsoft/Yahoo partnership is anticompetitive.

In an interview today, Cantor applauded the DOJ's request for more information.

"Most deals clear without a request for additional information. This is not run-of-the-mill," said Cantor. "The government believes there are potential antitrust concerns raised here. They would only request additional information if there was some kind of presumption that the deal will cause antitrust effects."

Cantor added that he thinks it could take months for Microsoft and Yahoo to pull this new information together, perhaps until the end of this year.

Nonetheless, Blackwell told Computerworld that Yahoo is still hopeful the deal will close early next year.

Read more about E-business in Computerworld's E-business Topic Center.