EU to investigate Microsoft-Yahoo deal

The EU is talking 'informally' to Microsoft and Yahoo at this stage

The European Union is to look into the Microsoft-Yahoo search partnership, following the news last week that the US Department of Justice will also be looking into the deal.

A confidential source told Reuters that the EU is not launching a full investigation at this stage, but is examining the deal in light of competition issues.

"There are ongoing informal discussions between the European Commission and Microsoft and Yahoo on their search engine partnership," the source said.

Given Microsoft's rocky past with the EU, any investigation could be a contentious issue, but the company has said that it was expecting the move.

"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," said Microsoft spokesman Jack Evans."We remain hopeful that the deal will close in early 2010."

Under the proposed agreement 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.