Microsoft and Yahoo partnership attract anti-trust probe

The US Department is now examining the advertising and search engine partnership between Microsoft and Yahoo, both companies confirmed last Friday.

Yahoo and Microsoft, whom are ranked second and third to Google in the search engine market, announced their partnership last July. The companies are combining forces in an attempt to topple web giant Google.

As stipulated in the arrangement, Microsoft will provide search and other related tools on Yahoo pages for a 12-percent revenue cut in the first five years of the deal. Yahoo estimates that the partnership will reel in an additional $500 million to the company’s annual operating income, while cutting expenses by around $200 million.

The anti-trust probe was anticipated, but the Department of Justice cannot block the deal, since the combined share of the companies is still less than half of Google’s market stake.

“As we said when the agreement was announced, we anticipated that this deal will be closely reviewed and we are hopeful it will be approved by early 2010,” commented Microsoft spokesperson Jack Ward.

On the other hand, Yahoo said that both companies “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.”

According to recent statistics, Google controls over 60 percent of the US search engine market, while Yahoo holds 20 percent and Microsoft owns 8 percent.