EU in informal talks on Microsoft, Yahoo deal - source

By Foo Yun Chee

BRUSSELS (Reuters) - EU antitrust regulators are in touch with Microsoft Corp and Yahoo Inc about their search engine deal, a source familiar with the situation said, with the talks seen more as exploratory than indicating any competition concerns.

"There are ongoing informal discussions between the European Commission and Microsoft and Yahoo on their search engine partnership," the source said on Tuesday, without giving further details.

Microsoft and the Commission were not immediately available to comment. Microsoft and Yahoo struck a 10-year Web search deal in July, seeking to challenge market leader Google Inc, which had 67.5 percent share of the worldwide search market in July, according to comScore.

By combining their search engines, Yahoo and Microsoft, the number two and three players, would hold roughly 30 percent of the U.S. search market, making their combined audience a more attractive place for marketers to spend their ad dollars.

Last week, U.S. antitrust authorities requested more documents from the companies, indicating the possibility of a months-long review. Both companies have said they do not expect an antitrust review to be completed until early 2010.

Antitrust experts said it was too early to say if the European Union executive could proceed to a formal probe.

European regulators have a more expansive view of competition than U.S. regulators, said Stephen Paul Mahinka, an antitrust attorney at Morgan Lewis.

What is more, Mahinka said, the Commission has a history of enforcement with Microsoft's business practices, which makes it not surprising that its plan to partner with Yahoo on search would face some scrutiny.