• by Wendy Davis  @wendyndavis, October 3, 2008

Google and Yahoo have agreed to temporarily delay going forward with their search deal while the Department of Justice continues an antitrust investigation.

"When we announced our advertising agreement with Yahoo in June, we agreed to delay its implementation until October to give regulators time to look at the details. As we are still in conversation with the Department of Justice, we have agreed to a brief delay in implementing the agreement while those discussions continue," Google spokesman Adam Kovacevich said Friday.

Kovacevich declined to comment on how long the delay might last. Previously, CEO Eric Schmidt had said he expected the deal to move forward by Oct. 11.

The pact between the two companies, which together account for around 80% of the search market, triggered vigorous opposition from Web rival Microsoft--which itself had tried to purchase Yahoo--as well as the Association of National Advertisers, World Federation of Advertisers and World Association of Newspapers.

Opponents say the deal could result in higher prices for search advertisers. Google and Yahoo counter that search marketers themselves determine the price of ads by auction-style bidding.

On Thursday, Sen. Herb Kohl (D-Wis.) sent a letter to the Justice Department, asking that it monitor the deal.

The nonpartisan think tank American Antitrust Institute recently issued a report recommending that the deal only proceed under conditions designed to preserve Yahoo's independence. That report noted that blocking the deal could also potentially lead to consolidation because Yahoo might be forced to exit the market altogether without Google's assistance with search.

Yahoo only entered into the arrangement with Google to fend off a hostile takeover attempt by Microsoft. While the deal is supposed to boost Yahoo's revenue by $800 million, the company says its ultimate goal is to become a stronger independent player.