WebProNews

Google and Yahoo have offered to decrease the size of their proposed search advertising deal in an effort to receive approval from federal regulators.

The newly proposed deal has been shortened to two years from 10 and limits the amount of revenue that Yahoo can receive from Google to no more than 25 percent, and allows Google advertisers to opt out of appearing on Yahoo, according to a report from the Wall Street Journal.

The previous Google/Yahoo ad deal had no caps on it and the amount of advertising outsourced was at the discretion of Yahoo. The deal has been under scrutiny by the U.S. Department of Justice for possible antitrust violations.

Yahoo spokeswoman Tracy Schmaler said," We have been working with the Department of Justice regarding our agreement with Google and those discussions are ongoing."

Google spokesman Adam Kovacevich said," We are continuing to have cooperative discussion with the Department of Justice about this arrangement, and agreed to a brief delay in implementing the agreement while those discussions continue."

Analysts said the revised deal could help it move forward with regulators, but noted that a limited partnership with Google may not be as financially beneficial to Yahoo as the original proposal.

Originally Yahoo hoped the deal would generate up to $800 million a year in additional revenue, but the scaled back proposal is likely to generate about half that amount. Yahoo has said it would use the additional revenue to boost its search business in an effort to attract more users and advertisers.

The deal has been criticized on fears that it would lead to higher advertising prices and unfair competition. Microsoft has said that the deal would give Google too much influence.