DOJ investigation holds up Google-Yahoo deal

Google and Yahoo will further delay their controversial search-advertising deal in the face of an ongoing investigation by the US Department of Justice.

"When we announced our advertising agreement with Yahoo in June we agreed to delay its implementation until October to give regulators time to look at the details," Google said on Friday. "As we are still in conversation with the Department of Justice, we have agreed to a brief delay in implementing the agreement while those discussions continue."

The agreement, announced just as Microsoft's acquisition bid for Yahoo was falling apart, will let Yahoo run Google ads with Yahoo's search results and on some Yahoo sites in the US and Canada. Critics have said the deal will hurt competition and lead to higher prices, since Google and Yahoo hold the top two market-share positions in search.

Google, which has recently stepped up its public statements in support of the deal, argues that prices will remain fair because advertisers pay based on an auction system. "Neither Google nor Yahoo set ad prices," wrote Tim Armstrong, president of advertising and commerce for Google in North America, in a recent blog post. "Ads are priced by an auction where an advertiser only bids what an ad is worth to them."

Google recently launched a website arguing why it thinks the deal would be good for advertisers.

The DOJ has confirmed that it is conducting an antitrust investigation into the partnership.