SAN FRANCISCO - The Justice Department has reportedly hired a top attorney to look more closely into a search deal between
The two companies in June had voluntarily agreed to put the search deal on hold for three and a half months in order to give the Justice Department time to scrutinize it. And the Justice Department is apparently doing just that by hiring former Walt Disney vice chairman Sanford Litvack, according to the
Wall Street Journal
Litvack, who served as an antitrust chief under President Jimmy Carter, is supposedly examining evidence collected so far on the deal in preparation for a challenge if the Justice Department decides to move forward with one, according to the
Google on Tuesday issued a statement in response to the report.
"We voluntarily delayed implementation of this arrangement to give the Department of Justice time to understand it, and we continue to work cooperatively with them," the company said.
"While there has been a lot of speculation about this agreement's potential impact on advertisers or ad prices, we think it would be premature for regulators to halt the agreement before we implement it and everyone can judge the actual impact.
"We are confident that the arrangement is beneficial to competition, but we are not going to discuss the details of the regulatory process."
Yahoo! also put out a statement defending the search deal: "We have been informed that the Justice Department, as they sometimes do, is seeking advice from an outside consultant, but that we should read nothing into that fact. We remain confident that the deal is lawful and that when the federal and state regulators with whom we have been working see it in action, they will find it to be pro-competitive and good for the marketplace."
Google's Chief Executive Eric Schmidt told
television late last month that the company planned to move ahead with the search deal in early October even if it hadn't received regulatory approval by then.
Google and Yahoo! reached the deal in June, which would allow Yahoo! to outsource some of online ads in the U.S. to its rival and share the revenues. Yahoo! expects the arrangement to generate $800 million annually for the company.
The Association of National Advertisers, which includes
Procter & Gamble
as members, last week sent a letter to the Justice Department voicing its objections to the deal.
The organization pointed out that the partnership would result in Yahoo! and Google controlling 90% of search advertising inventory, which would likely diminish competition, increase the concentration of market power and potentially raise prices to advertisers for high quality, affordable search advertising.
Shares of Google were up .64% to $422.64 while Yahoo! was down 2.5% to $17.80, a five-year low.