Google sure regulators won't bar Yahoo deal

Google is confident regulators would not prevent a deal between the web search giant and rival Yahoo, because it would be "non-exclusive" and falls short of an outright merger, a person familiar with Google's thinking has said.

Yahoo is exploring alternatives to Microsoft's $42.7 billion takeover offer, which the web pioneer has rejected for being too low.

The US Justice Department is questioning the companies about potential competitive issues raised by a partnership, sources said this week, as Yahoo completed a two-week test of Google's system for selling ads alongside Yahoo's own web search results.

Google believes such a partnership would not be anti-competitive because it would be an arrangement in which Yahoo would use Google's more profitable search advertising platform to make more money for itself, said the source, speaking on condition of anonymity.

A deal would be no different from partnerships Google has with other Web companies including Time Warner's AOL and IAC/InterActiveCorp, the source said.

By contrast, Google thinks a takeover by Microsoft of Yahoo would raise far more antitrust concerns because the combined company could corner large chunks of multiple markets, from Web mail to instant messaging, the person said.

Google is the top search engine, and a tie-up with No. 2 search engine Yahoo would give the two companies more than 80 percent of the market, according to ratings company Hitwise.

Neither company has disclosed the results of the test, under which three per cent of US Yahoo searches carried advertisements using AdSense. Yahoo President Susan Decker said on Tuesday it was "premature" to speculate on options the company might pursue with Google.

Google remains open to further discussions with Yahoo on hammering out a deal because no final decisions have been made, the source said.

For its part, Microsoft has said a Yahoo-Google partnership would make the market for Web search far less competitive.

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