The US Department of Justice has said that it is "interested" in looking at the possible antitrust effects of any deal struck between Microsoft and Yahoo.
Microsoft announced on Friday that it would bid $44.6bn (£22.7bn) for Yahoo. Following the announcement, US Department of Justice spokeswoman Gina Talamona said the DoJ antitrust department would scrutinise any deal.
"The antitrust division would be interested in looking at the competitive effects of the transaction," Talamona told the Associated Press on Friday.
Microsoft and the DoJ have famously tangled over antitrust issues before. In 2002, Microsoft settled with the DoJ in a case that hinged on Microsoft's bundling of Internet Explorer with its operating systems.
The European Commission on Friday said that it would wait for Microsoft to notify it about any proposed deal with Yahoo. The Commission has also clashed with Microsoft in the past over antitrust issues concerning workgroup server interoperability.
The Commission is also scrutinising Microsoft's bundling of Internet Explorer with its operating systems.
Legal experts said authorities in the US and Europe could scrutinise the proposed Microsoft-Yahoo deal from both antitrust and privacy angles.
"This is a two-pronged issue of competition and privacy and will be treated as such by the competition and regulatory authorities both in Europe and the US," said Hans Friederiszick, managing director of the European School of Management and Technology Competition Analysis department.
The academic said competition issues could focus on the question of whether the deal would encourage unilateral price increases for internet advertising via search engines.
"This merger will reduce the number of search-engine providers with significant global reach from three to two, paving the way for a tight duopoly in these markets," said Friederiszick. "As such, the EC competition authority is right to carefully scrutinise ongoing mergers in this industry."
Google has also questioned whether the proposed deal would pass regulatory scrutiny. David Drummond, Google's chief legal officer, wrote in a blog post on Friday: "Could the acquisition of Yahoo allow Microsoft — despite its legacy of serious legal and regulatory offences — to extend unfair practices from browsers and operating systems to the internet? In addition, Microsoft plus Yahoo equals an overwhelming share of instant messaging and web email accounts. And between them, the two companies operate the two most heavily trafficked portals on the internet. Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM and web-based services?"
Microsoft said it expected to receive regulatory approval for the Yahoo acquisition. "Microsoft believes this proposed combination would receive all necessary regulatory approvals and expects that the proposed transaction would be completed in the second half of calendar year 2008," said Microsoft in a statement on Friday.