Week in review: Microhoogle intrigue

The U.S. Department of Justice plans to gather information from third parties in a probe of the advertising deal struck last month between Google and Yahoo. Within the next week, the Justice Department is expected to issue civil investigative demands (CIDs) that seek documents from third parties, which are expected to include competitors, customers such as major advertisers, and potential partners.

Yahoo announced the nonexclusive partnership in June under which rival Google will supply it with some search ads, a move that could increase Yahoo search revenue but that also gives Google even more power in the market. Yahoo expects the 10-year deal to raise revenue by $800 million in its first year and to provide an extra $250 million to $450 million in incremental operating cash flow.

No one expected the two companies' search-advertising deal to escape government scrutiny. But at this stage, there are more uncertainties than certainties. CNET News.com tackles some of the major questions about the deal and offers answers about the situation in an FAQ you can read here.

The partnership idea came to light during Microsoft's attempt to acquire Yahoo, which put more pressure on the Internet company to improve its financial results. Microsoft, meanwhile, has reportedly been sidling up to other companies about teaming up to make a bid for Yahoo, a move that would result in a break-up of the Internet search pioneer, with Microsoft retaining the search portion of Yahoo's business.

Microsoft reportedly is talking to Time Warner and News Corp. about this arrangement, giving investors a sense of deja vu. Time Warner and News Corp. were among the white knights Yahoo had reportedly sought out after Microsoft announced its unsolicited bid earlier this year.

Microsoft has also reportedly met with Carl Icahn in recent days, urging the billionaire to keep pressing his proxy fight in an effort to motivate Yahoo's board.

Regardless of what happens with Yahoo, Microsoft is moving ahead in the search sector. The software giant confirmed earlier rumors and reports that it was buying Powerset, a search and natural language company.

The company said that Powerset's technology will complement existing natural language processing work being done inside Microsoft's research unit. Powerset, which has 63 employees, recently made public a tool for searching Wikipedia.

Software revelations
Adobe Systems is helping Google and Yahoo technology to uncover Web content that was previously "invisible" to Web searches. Both companies have been given optimized Adobe Flash Player technology to help them better index dynamic Web content and rich Internet applications that include the Flash file format, or Shockwave Flash.

Search engines already index static text and links within Shockwave Flash files, but rich Internet applications and dynamic Web content are elusive to search engines because of their changing states, Adobe noted. Google has already added the optimized Flash Player to its search engine, while Yahoo plans to add the technology to a future update of Yahoo Search.

It sounds exciting and promising, but what exactly does it mean for Web searchers, Webmasters, and Flash creators? CNET News.com asked Adobe, Google, and Yahoo to get some answers and created an FAQ to sort it out for you.

Microsoft, meanwhile, hopes a new Office subscription service will help more buyers materialize. The idea behind the subscription service Equipt is to convert more new PC buyers into Office buyers. Although most people don't buy Office at the same time as a computer, many do purchase a security software subscription.

Microsoft is trying to tap into the fact that while many people would rather find a copy of Office that they don't have to pay for (either an older version or a pirated copy) they are willing to pay for security software.

Equipt bundles a subscription version of Office Home and Student with Microsoft's OneCare antivirus product for $69 a year--just $20 more than the suggested price of OneCare alone.

Microsoft also said it is adding a new licensing option targeted largely at midsize firms. The program's two main attractions are the fact that it is not tied to a specific term and it makes it easier for different subsidiaries of a company to take advantage of their combined purchasing power.

The additional option runs counter to the trend at Microsoft, which has been working to scale back the number of different licensing plans. The company had managed to shrink its number of options--from 107 programs in 2006 to 23 as of last year.

On the road
Two News.com staff members have managed to extract themselves from their desks in the San Francisco office.

Daniel Terdiman crossed the 3,000-mile mark in his Road Trip 2008 project. He was on his way to New Orleans, where he observed both the post-Katrina malaise in the Lower Ninth Ward and the engineering work underway to rebuild the levees and pumps to protect the city if and when the next hurricane hit.

He also observed the Blue Angels, the remarkable pilot troupe, in action at its home base in Pensacola, Fla.

Across the Atlantic and the Mediterranean, Charles Cooper checked out a tech conference in Tel Aviv, Israel. He was able to snag interviews with a well-known VC in the Israeli high-tech industry and with the wealthiest man in Israel.

Also of note
Dell shares rose as high as 4.5 percent, following reports that founder Michael Dell acquired nearly $100 million in shares in the computer maker. ..Movie-rental chain Blockbuster withdrew its $1 billion bid for consumer electronics chain Circuit City. ..CBS completed its $1.8 billion acquisition of CNET Networks, publisher of many Web sites including CNET News.com.