Google, Yahoo! Delay Search Deal

NEW YORK Google and Yahoo! said they would delay implementation of their search advertising deal to give federal regulators more time to examine the agreement.

The deal calls for Google to supply Yahoo! with advertising on some of its search results pages in the U.S. The companies planned to implement the agreement early this month.

“The companies have agreed to a brief delay in implementing this agreement to continue our ongoing discussions with the Department of Justice,” Yahoo! representative Adam Grossberg said in an e-mailed statement. “We have had discussions with regulators and look forward to responding to their questions about this agreement.”

Grossberg declined to say how long the companies would agree to delay the deal.

Since its announcement in June, the agreement has been met with a drumbeat of criticism from many quarters, not least Google rival and former Yahoo! suitor Microsoft. Microsoft has argued the agreement would give Google a stranglehold on the search market, as Yahoo! is compelled by short-term financial needs to rely on more lucrative Google results for an increasing share of searches.

Microsoft’s argument has found favor among a broad set of advertisers and ad agencies, which worry the agreement will lead to higher prices for search advertising. An analysis by search management system provider SearchIgnite concluded prices on Yahoo! keywords funneled to Google would rise 22 percent.

The Association of National Advertisers came out against the deal earlier this month, following quiet lobbying by several agencies for the Department of Justice to block the agreement. The World Association of Newspapers and The Center for Digital Democracy also oppose the agreement.

The Department of Justice has taken preliminary steps that indicate it could move to block the agreement, reportedly hiring anti-trust litigation specialist Sandy Litvack.

Both Yahoo! and Google stepped up their lobbying efforts for the deal this week, each launching sites explaining their position on the deal. Yahoo! president Sue Decker wrote this week the deal will allow the company to become a stronger competitor in online advertising by generating more money for development. Yahoo! has said it expects to generate an additional $800 million from the deal.