The US Justice Department has launched an investigation into the deal that was brokered between Google and Yahoo earlier this month.

According to the Department of Justice, the companies’ initial test period has proven troublesome and the regulatory body is concerned that the deal between them violates antitrust laws and could have a negative impact on the world economy if the two major search companies start collaborating.

Did Ballmer call?

The original deal, which placed Google search ads on three per cent of Yahoo’s search results, raised a red flag at the Justice Department, but investigators were unwilling to step in.

Soon thereafter, an “anonymous source” tipped the Department to a possible phone call made by Google CEO Eric Schmidt to Yahoo CEO Jerry Yang where both leaders developed the collaborative plan in an effort to thwart Microsoft’s acquisition bid for Yahoo.

Full disclosure

"Yahoo proactively kept the Department of Justice informed of its intention to conduct this limited test with Google and has provided information to the DOJ on the nature of the test," Yahoo spokeswoman Tracy Schmaler told Reuters.

The Department of Justice has yet to comment on the investigation, but did say that it was probing alleged wrongdoings.  Look for much more on this as information becomes available.