U.S. deepens review of Yahoo, Microsoft deal

By Reuters Staff
September 11, 2009

The headquarters of Yahoo Inc. is pictured in Sunnyvale, California, May 5, 2008. WASHINGTON, Sept 11 (Reuters) – U.S. antitrust regulators have requested more documents in their probe of Microsoft Corp’s deal to provide search engine technology to rival Yahoo Inc, the two companies said on Friday.  Microsoft and Yahoo confirmed that the Justice Department’s antitrust division had made a second request for documents, which indicates a decision to conduct a deeper review that could take months.

“We received this additional request as we expected from the government,” said Microsoft spokesman Jack Evans.

“We’re obviously cooperating fully,” said Yahoo
spokesman Adam Grossberg.

The companies said they were hopeful that the deal, struck in late July as a way to challenge search giant Google, would close in early 2010.

Google is the No. 1 search engine with about 65 percent of searches, while Yahoo is in second place at about 19 percent and Microsoft in third place with about 9 percent.

Antitrust experts generally expect the deal will get close scrutiny from regulators, but ultimately will be approved.

At the end of July, Microsoft and Yahoo signed a 10-year deal under which search on Yahoo’s websites will be generated by Microsoft’s new Bing search engine.

Microsoft will license Yahoo’s search technology, allowing Microsoft to integrate certain aspects of it into Bing. Microsoft’s advertising search product, AdCenter, will also replace Yahoo’s equivalent product, Panama.

While Yahoo’s deal with Google for a search-ad partnership was scotched last year after vehement objections from advertisers and newspapers, the two industries were enthusiastic about the prospect of Microsoft and Yahoo teaming up to provide stronger competition to Google, said a source close to the deal who asked not to be named because of its sensitivity.

Microsoft has expressed confidence that it can persuade regulators that a stronger rival for Google is in the best interests of the market.

A second source close to the deal declined to describe what information had been requested. “It’s fairly detailed in that we have to provide data on our search engine deal,” said the source, who also declined to be named because of the sensitivity of the matter. “It’s just more encompassing.”

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