The U.S. Department of Justice is investigating Yahoo’s recent collaboration with Google (GOOG) on search advertising, a key defence against Microsoft’s (MSFT) takeover bid.
Yahoo (YHOO) and Google completed a two-week trial last week that both declared a success. In it, Yahoo outsourced search ad sales on about 3% of its inventory to Google, an experiment that could lead to a full-blown search-ad deal between the two, giving a $500 million annual boost to Yahoo’s cash flow projections. More importantly, it could force Microsoft to boost its bid for the company.
Microsoft argued the test was illegal from the start, and apparently someone at the DOJ agrees. Reuters says the investigation is focused on a phone call from Google CEO Eric Schmidt to Yahoo CEO Jerry Yang offering to help defend against Microsoft’s $44.6 billion takeover bid.
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