Another challenge to Google deal with Yahoo!

The U.S. government is looking into whether the partnership that would allow Google (NASDAQ: GOOG) to sell search ads on Yahoo! (NASDAQ: YHOO) is anticompetitive. The two companies have over 75% of the search market in the U.S. European Union regulators have also started an investigation.

Now the real piling on has begun. According to The Wall Street Journal, The World Association of Newspapers is opposing the deal because "the agreement would reduce the cost of paid search ads and lower revenues for newspapers' and others' Web sites." That adds a bit of confusion. Marketers oppose the deal because a monopoly would raise rates and cost them more money.

The future of the agreement is now being challenged from a number of sides for a number of reasons. If the pressure becomes great enough, Google may simply walk away. Selling advertising for Yahoo! may be a good business, but it is not likely to balloon the search giant's earnings.

Yahoo! is another matter. It needs improved revenue from search ads to make the case that it should stay independent and that is can drive earnings up on its own.

Without Google, Yahoo! has a very modest future. At $18.85, Yahoo! trades near a 52-week low. Without Google, the shares could go much lower.

Douglas A. McIntyre is an editor at 247wallst.com.