DoJ to investigate Microsoft-Yahoo deal

The Microsoft-Yahoo search deal is under close scrutiny

The US Department of Justice (DoJ) is to take a closer look at the proposed search agreement between Microsoft and Yahoo.

The DoJ was already looking at the deal, but has now asked both companies for more details, according to reports on Bloomberg. In particular the DoJ will be examining search engine investments, ad pricing and product plans.

"The anti-trust agencies are pretty sceptical of the argument that you need to be bigger to compete," said Michael Katz, a former chief economist in the DoJ's anti-trust unit. "The DoJ will respond: 'Why can't you get bigger by competing?'"

Under the proposed deal Yahoo will use Microsoft's Bing search engine to power its results, and the two companies will split advertising revenue from adverts sold next to the results.

"Yahoo and Microsoft are co-operating fully with the DoJ, and firmly believe that the information they will be providing will confirm that this deal is not only good for both companies, but for advertisers, publishers and consumers," said Yahoo spokesman Adam Grossberg in a statement.