US Justice Department Scrutinizing GooHoo Paid Search Test

According to Reuters the US Justice Department is taking a look at the paid search partnership test between Google and Yahoo. According to the article, there are antitrust concerns raised by the test and its implications and the Justice Department has “initiated an investigation” of it.

The article goes on to say, “The source, who spoke on condition of anonymity, said some of the government’s concern focused on a telephone call from Google Chief Executive Eric Schmidt to Yahoo Chief Executive Jerry Yang to offer help in thwarting Microsoft’s bid worth around $44 billion.”

The idea is that any partnership between Google and Yahoo could ultimately result in higher prices for paid search ads and stifle competition. Google and Yahoo are reportedly cooperating with the investigation.

On the Yahoo Q1 earnings call, Yahoo President Sue Decker affirmed Yahoo’s desire to be a significant player in search advertising and implied it would not be abandoning Panama for complete outsourcing to Google. That would almost certainly be precluded by regulators.

She did say that the company is seeking to optimize near-term search revenue and that may include a paid search deal with Google.