EU scrutinises Yahoo-Google deal

The deal will see Google’s adverts alongside Yahoo’s search results

The European Union has announced that it has been investigating the terms of Google’s proposed deal to partner with Yahoo for advertising.

The deal would see Google’s advertising programs built into Yahoo’s search engine in the US and Canada.

However, the EU Competition Commission argues that there are anti-trust implications because the two companies do business in Europe.

The EU’s present inquiry could escalate to a formal investigation.

The announcement follows on the heels of news of a similar anti-trust investigation by the US Department of Justice.

If it goes ahead, the partnership would control more than 80% of the online advertising market.

EU antitrust regulations have traditionally proven more strict than American ones, so the investigation could prove to be a significant stumbling block for the deal.

The World Association of Newspapers, which represents some 18,000 titles worldwide, joined the fray in opposing the deal on Monday.

“The reality is that a large portion of the traffic to most online newspapers’ websites today comes through paid search or natural results on search engines,” the group said in a statement.

“For this reason, competition among search engines is absolutely vital for newspapers – to ensure that no search engine can set monopoly prices for paid search ads, and to prevent any search engine from influencing users’ surfing habits by manipulating unpaid search results.”

Each advert will generate revenue for Google. However, there is considerable speculation that another motivation is to provide Yahoo with an alternative to Microsoft’s bid for a hostile takeover.

Both Yahoo and Google say that they are cooperating with investigators on both sides of the Atlantic, but argue that they will go ahead with the deal in October.