Regulators drawing a bead on Yahoo, Microsoft partnership

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They called it "Microhoo."

In late July, after a few months of very public wrangling, Microsoft and Yahoo announced a search and advertising sales partnership intended to break Google's stranglehold on the search market. Now, that deal will undergo scrutiny from regulators in the US and abroad.

According to several reports filed today, both the European Union and the US Justice Department have launched probes of the partnership. The Justice Department has until the end of September to give Microsoft and Yahoo the thumbs up. (Or the thumbs down.)

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"As we said when the agreement was announced, we anticipated that this deal will be closely reviewed in the US and EU, and discussions in both geographies continue," Microsoft spokesman Jack Evans told Reuters. "We remain hopeful the deal will close in early 2010."

Under the terms of the 10-year partnership, Microsoft would eventually become the search provider for both companies. Yahoo, meanwhile, would get 88 percent of the search-generated ad revenue from its sites over the first five years of the deal.

In July, Monitor reporter Michael B. Farrell wrote that the deal could be hugely beneficial to both companies. Yahoo, which has struggled to orient itself in the new Web landscape, would get some help finding its bearings. And Microsoft would snap up Yahoo's search shares, bringing the fight to Google's doorstop.

Not that Microsoft wasn't already headed in that direction.

As we noted yesterday, a new batch of figures puts Bing as the fastest growing search engine in the United States. According to Nielsen, a media research firm, Bing now holds nearly 11 percent share of the market – a far cry from Google's 65 percent, but solid nonetheless.

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