Google, Yahoo In Talks To Fend Off Antitrust Action: Report

Google (NSDQ: GOOG) and Yahoo (NSDQ: YHOO) are in talks with the Justice Department over their proposed ad deal, in an effort to head off an antitrust challenge, reports WSJ, citing sources. While the regulatory investigators are building their case to block this deal, settlement talks are also in an early stage. The drumbeat against the deal has been steadily growing louder over the last month or so, as rival companies and associations have come out against the search ad deal.

In settlement talks, the two companies are considering some concessions, including lowering the volume of queries on Yahoo on which Google’s ads would be shown, and that Yahoo would continue to be a search ad player and not abandon it. Also, a reporting mechanism that would ensure compliance (and also monitor ad pricing) is also being considered, the story says.

Building in these checks and balances could result in some disclosure the two companies may not be too comfortable with, especially Google: it would mean disclosing some of the technology behind Google’s contextual ad service, something of a black box till now. This may also mean Yahoo’s hopes on the financial side may also have to be limited to some extent.

Meanwhile, *Microsoft* continues to argue that this deal and the dynamics of the marketplace are too complex to regulate, and best for such a deal to not be approved at all.