Yahoo’s attempt to scheme an alliance with Google to stave off Microsoft could run into more trouble with antitrust regulators than Microsoft’s unwelcome takeover bid.

While Yahoo is seeking a business partnership with Google — unlike the outright merger that Microsoft wants — legal experts say any deal amidst the world’s two largest World Wide Web search services would draw heavy scrutiny from U.S. and European competition regulators.

“The Justice area would certainly want to take a serious look at that considering it would mean that a firm that would want to take advertisements or to place advertisements would have only one place to go,” said Aaron Edlin, who teaches law and economics at the University of California, Berkeley.

In recent years, Web search services have taken by from once-popular portals or home pages, like AOL, MSN or Yahoo’s own home page, as the primary starting point for many consumers seeking info on the World Wide Web.

Google held a 59.2 percent share of the U.S. Web search market in

February, compared with Yahoo’s 21.6 percent and Microsoft’s 9.6 percent, the research firm comScore said.

To counter that dominance, Microsoft offered in January to buy Yahoo in a cash-and-stock deal now valued at $42 billion.

Yahoo rejects that price as too low and has been casting around for other partners. It announced last week a tryout to outsource search advertising to Google, which sources say is part of Yahoo’s plans to profile a three-way alliance with moment Warner’s AOL unit to fend off Microsoft.

Antitrust experts said that regulators would probably oppose any permanent alliance amidst Google and Yahoo, while they would probably approve Microsoft’s proposal for a Yahoo merger.

“A Yahoo-Microsoft merger would primarily be designed to attack Google,” said Thomas Hazlett, who teaches law and economics at George Mason University in Virginia. Hazlett said that that type…

Original post by Vincent Nguyen

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