April 9, 2008 / 9:31 PM / 12 years ago

UPDATE 1-US antitrust panel senator watching Yahoo/Google link

(Adds further quotes from Kohl, background, market share)

WASHINGTON, April 9 (Reuters) - A U.S. senator who heads an antitrust subcommittee said on Wednesday that he was watching Yahoo Inc’s YHOO.O test tie-up with Google (GOOG.O) “to ensure that it does not harm competition.”

Yahoo said on Wednesday it would carry Web search advertising from Google in a test that could put pressure on Microsoft Corp (MSFT.O) to raise its $42.1 billion bid to buy Yahoo, which has been rebuffed.

“We will be following closely the results of the short-term test alliance between Yahoo and Google,” said Sen. Herb Kohl, a Wisconsin Democrat, in a statement. “Should there be moves to make this agreement permanent, we will examine it closely in the Antitrust Subcommittee to ensure that it does not harm competition.”

Microsoft has been pressing to buy Yahoo, an ailing Web star that has been under pressure from Wall Street to either cut jobs or make more money from advertising.

Google and Microsoft are bitter rivals. Microsoft staunchly opposed Google’s offer to buy advertising company DoubleClick for $3.1 billion last year. U.S. antitrust regulators approved the deal in December.

“Following closely on the heels of Google’s acquisition of DoubleClick, this Google-Yahoo alliance would represent even further consolidation in the Internet advertising market,” said Kohl. “We must ensure that this consolidation does not foreclose needed competition or harm consumers.”

Google’s share of the Web search market among the top five providers has grown to 59.2 percent in February from 52.6 percent at the start of 2007, according to Internet audience statistics from comScore Inc.

Meanwhile Yahoo’s share has dropped to 21.6 percent in February from 26.9 percent in January 2007, and Microsoft has fallen to 9.6 percent in February from 10.4 percent at the start of 2007, according to comScore. (Reporting by Diane Bartz; Editing by Tim Dobbyn)

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