• by Wendy Davis , Staff Writer, July 2, 2008

The Department of Justice has begun its review of the Yahoo-Google search deal, according to today's Washington Post.

The Postreports that the scope of the review indicates the authorities are troubled by the deal, which involves Yahoo outsourcing a small proportion of its search ads to Google. "A formal investigation signals that the department may have found some cause for concern," writes the Post.

But Google today denied that the probe is any more extensive than anticipated. "We are continuing to have cooperative discussions with the Department of Justice about this arrangement," the company stated. "That process is continuing exactly as expected."

When Yahoo announced it had forged a deal with Google -- a move aimed at shutting down Microsoft's takeover bid -- the companies said they would delay deployment for three and a half months, to give the authorities time to investigate. Given Google's dominance -- the company accounts for more than 60% of the search market -- everyone anticipated an antitrust review. Indeed, Microsoft itself raised antitrust issues as far back as April, when Google and Yahoo conducted a two-week test of a search outsourcing deal.

Still, whether there's reason to think the feds are concerned or not, Microsoft apparently is again floating a plan to acquire Yahoo. Today's Wall Street Journalreports that Microsoft is approaching other media companies about working together to break up Yahoo. As of today, however, the Journal reports that such a deal doesn't seem especially likely.