Google called off its proposed search advertising deal with Yahoo just three hours before the U.S. Department of Justice was to file an antitrust complaint on Nov. 5 aimed at blocking it, according to the lawyer that the government hired to pursue the case.

DOJ opposition scuttled Google deal, Yahoo says
Yahoo in precarious position as CEO beckons Microsoft

In an interview with the legal blog AMLaw Daily published Dec. 2, Sanford Litvack - the attorney who would have been the lead counsel on the antitrust case - said that Google and Yahoo decided to abandon the proposed deal shortly after DOJ officials informed them of the agency's plans to file the antitrust complaint.

Shortly after the deal - which would have had Yahoo running Google advertisements alongside its own search results - was announced in June, Google and Yahoo came under fire from large advertiser groups, which charged that the arrangement would diminish competition and raise online advertising prices.

And an antitrust think tank said the partnership could end up as a "black hole that swallows up Yahoo," thus justifying an antitrust investigation.

In addition, the chairman of the U.S. Senate's antitrust subcommittee in October urged the DOJ to closely examine the proposed partnership, noting that it could lead to higher advertising prices and create unfair market conditions. Sen. Herb Kohl (D-Wis.) said at the time that the subcommittee's investigation found that many advertisers and competitors were concerned that Google would control a dominant share of the search advertising market. Under the deal, Yahoo would have less incentive to compete against Google and could opt to exit the market altogether, Kohl asserted.

Litvack went on to note that the complaint - which was never filed - would have charged that the deal would have violated antitrust regulations that bans agreements that restrain trade and prohibit companies from monopolizing or attempting to monopolize trade.

"It would have ended up also alleging that Google had a monopoly and that [the advertising pact] would have furthered their monopoly," Litvack said in the blog. "The fact that we filed a lawsuit would not by itself have stopped them. We would have had to get an injunction from the court, and we would have sought that."

For more enterprise computing news, visit Computerworld. Story copyright Computerworld, Inc.