Microsoft-Yahoo! Has Own Antitrust Hurdle

SAN FRANCISCO - Despite many Yahoo!(YHOO) shareholders, including CEO Jerry Yang , hoping again for a merger with Microsoft(MSFT), getting a deal past government scrutiny may be an uphill battle.

Opponents of a combination stand ready to object, not the least of which would be Google(GOOG), which walked away from its online search-ad deal with Yahoo! earlier this week, spurring hope of renewed talks between Microsoft and Yahoo!.

Google has complained to the DOJ about Microsoft in the past. In 2007, it lodged an objection regarding the Windows Vista desktop search function. Google is not likely to remain silent on any deal that mirrors its own defunct alliance with Yahoo!, given Microsoft's public objections at the time.

And the 15 state attorneys general that weighed in on the DOJ's recent investigation into the Google-Yahoo! arrangement, aren't likely to smile on a Microsoft-Yahoo! alliance, either.

Bert Foer, president of the American Antitrust Institute, a Washington think tank, says he hopes the DOJ remains vigilant toward efforts by Microsoft, as well as Google, to reduce Yahoo!'s independence.

"I would not say either the Justice Dept. or AAI would automatically reject any possible deal, but both are likely to look at it with initial skepticism and a concern about increasing Microsoft's power in the marketplace," Foer says.

The DOJ may indeed raise objections, says antitrust specialist Marc Edelman, a visiting professor at Rutgers School of Law. The abandoned Google-Yahoo! contract involved an alliance between the No. 1 and No. 2 search engines, in terms of market share, which had strong anticompetitive implications, he says.