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Microsoft, Yahoo talking to EU about proceeding on deal

Microsoft and Yahoo are trying to find out whether to file formal notice of their search deal with the European Commission or with individual countries, Microsoft says.

Representatives from Microsoft and Yahoo have filed paperwork for regulatory clearance in the U.S. for their proposed search deal but it remains unclear how to proceed in Europe, a Microsoft spokesman said on Wednesday.

The issue that remains in Europe is "determining whether or not the deal requires formal notice before the (European) Commission and if not, do we need to file notice" in individual countries that might have an interest in reviewing the deal, said Microsoft spokesman Jack Evans.

These jurisdictional issues are being discussed in ongoing talks Microsoft and Yahoo have been having with EC officials that were the subject of a Reuters report, according to Evans.

"We have had informal discussions in Europe about the agreement just as we indicated we would when the deal was announced," he said.

Yahoo representatives familiar with the matter did not immediately respond to an e-mail seeking comment.

Last week, the companies said the U.S. Department of Justice had asked for more information about their deal under which Microsoft would provide search for Yahoo's Web pages, thus bringing to a close Yahoo's tenure as a search provider.

The antitrust scrutiny is likely to be more intense in the U.S., where Google has about three quarters of the search market and Microsoft and Yahoo combined have about one fifth, than in Europe where Google's market share exceeds 90 percent.

Update 3:25 p.m. PDT: In a statement, a Yahoo spokesperson said "As we indicated at the time of announcement, the agreement is subject to regulatory approval and Yahoo and Microsoft are engaging in discussions with the regulators in Europe about the agreement. Yahoo and Microsoft are committed to engaging positively with the Commission about the agreement and firmly believe that the information we will be providing will confirm that this deal is not only good for both companies, but it is also good for advertisers, good for publishers, and good for consumers. As we have indicated previously, we're hopeful the agreement will close in early 2010."