An advertising partnership unveiled Monday by Yahoo and Microsoft is already raising eyebrows among lawmakers. Senate Judiciary Antitrust Subcommittee Chairman Herb Kohl, D-Wis., said his panel would closely review the deal, which would result in direct competitors working together. A similar deal between Google and Yahoo fell apart in November after U.S. regulators warned they would file a lawsuit to block it.

"Our subcommittee is concerned about competition issues in these markets because of the potentially far-reaching consequences for consumers and advertisers, and our concern about dampening the innovation we have come to expect from a competitive high-tech industry," Kohl said in a statement. Senate Judiciary Antitrust Subcommittee ranking member Orrin Hatch, R-Utah, said he did not see "any immediate yellow flags" from an antitrust front. Competitive Enterprise Institute argued regulators "can best serve consumer interests by leaving well enough alone."

But some watchdogs disagree. They say the relationship could be an initial step toward complete integration of the two firms, raising questions about the collection and sharing of consumer data. The Center for Digital Democracy's Jeff Chester said he will ask antitrust officials in the United States and Europe to "closely and skeptically" examine the deal. "What we are now witnessing is the emergence of a global digital advertising duopoly: Google and Microsoft/Yahoo," Chester said.

For its part, Google is eagerly awaiting more details about the deal, a spokesman said. "There has traditionally been a lot of competition online, and our experience is that competition brings about great things for users," he said. Computer and Communications Industry Association President Ed Black, whose group represents Google, Microsoft and Yahoo, said the preservation of Yahoo as an independent company is important component of the deal, which "appears to strike a reasonable balance." Last year CCIA raised concerns about Microsoft buying Yahoo and a possible Google-Yahoo partnership.

So what makes MicroHoo different from GooHoo? The proposals are different in several ways. The failed Google-Yahoo deal wouldn't have changed natural search results for Yahoo and Yahoo could have used Google's tools to place ads in new places. The Microsoft-Yahoo deal basically gets Yahoo out of the search business by outsourcing the service to Microsoft's Bing search engine. Search ads will also be Microsoft-based yet Yahoo will continue to sell ads for both companies. Such an arrangement could be easier said than done, logistically speaking.

It remains uncertain whether Google will take an obstructionist approach to the deal as the company's supporters claimed Microsoft did last year when DOJ was pondering the Google-Yahoo pairing. During that proceeding, Microsoft made several claims that now might come back to haunt them. DOJ and Microsoft were concerned that in the Google-Yahoo deal, Yahoo would be overly reliant on Google's ad system and exit the field of search ads completely. Under the Microsoft-Yahoo deal, Yahoo is doing just that. Microsoft and DOJ also argued that "search advertising" is its own market and two players in a market that get together regardless of market share is presumptively illegal.

Analysts at Stifel Nicolaus said they believe the deal will get a close look by federal regulators and some consideration by state attorneys general. "Government approval is doable, but we continue to believe there is a material risk that the deal would be blocked or conditioned," they wrote. Privacy concerns and the fact that new Assistant Attorney General for Antitrust Christine Varney has pledged tougher antitrust enforcement could also be important factors.