WASHINGTON — The Justice Department has opened a formal antitrust investigation into a deal struck last month that would allow the Internet titan Google to provide some search advertising for Yahoo, according to sources familiar with the inquiry.
Investigators are planning to demand documents not only from Google and Yahoo but also from other large companies in the Internet and media industries, said the sources, who spoke on condition of anonymity because the investigation is ongoing.
Google and Yahoo officials have said since the deal’s announcement that they would delay its implementation for a voluntary Justice Department review. But a formal investigation signals that the department may have found some cause for concern.
Lawyers familiar with similar investigations said that the kind of legal requests being issued by the Justice Department in this case — “civil investigative demands” — are not used for routine matters.
“It doesn’t mean they have drawn any conclusions,” said Peter Guryan, a partner with Fried Frank and formerly an antitrust lawyer in the Justice Department. But “it is a significant step beyond a request for voluntary information,” he said. “It demonstrates that the DOJ clearly has questions.”
Officials with Google, Yahoo and Justice declined to comment.
Under the Google-Yahoo deal, announced June 12, Google would provide search advertising to Yahoo for some but not all Yahoo searches in the United States and Canada.
The two would share the advertising revenue, with Yahoo estimated to receive as much as $800 million annually from the agreement.
“Toyota sells its hybrid technology to General Motors, even though they are the No. 1 and No. 2 car manufacturers globally,” Omid Kordestani, a Google senior vice president, noted in a blog post. “Canon provides laser printer engines for HP, despite also competing in the broader laser printer market. Google and Yahoo will continue to be vigorous competitors, and that competition will help fuel innovation that is good for users.”
But critics and competitors of Google — chief among them Microsoft — have argued that the deal essentially will limit choices for advertisers and render Yahoo less likely to compete against Google.
Asked whether Microsoft has been issued a demand for information in the investigation, a company spokesman declined to comment.
“This is a complicated situation, but one of the key questions is very simple,” said David Balto, an antitrust lawyer who was competition policy director at the Federal Trade Commission during the Clinton administration. “What is Yahoo’s incentive to continue to compete?”
