"The antitrust division would be interested in looking at the competitive effects of the transaction," said Justice Department spokeswoman Gina Talamona.
A spokesman from the Federal Trade Commission, which in December approved Google's $3.1 billion purchase of online advertising company DoubleClick, declined to comment. That deal still faces antitrust scrutiny in Europe.
Keith Hylton, a professor of antitrust law at Boston University, said Google's success in online search and advertising means a combined Microsoft-Yahoo would have significant competition.
"The fact that Google dominates this business will be a big factor in their (Microsoft's) favor in trying to get this approved by the regulators," Hylton said.
A federal judge this week extended by 18 months court oversight of Microsoft's market power, which began in 2002 after a landmark antitrust settlement. Hylton said Justice has been relatively lenient with Microsoft, compared to state attorneys general. It was a group of states that pushed for the extension of court oversight of the software giant, while Justice officials said the 2002 antitrust settlement had largely served its purpose and should expire.
"If this deal goes through, there will be a lot of very close scrutiny ... there appears to be lots of overlap," said Harry First, a professor at New York University's School of Law. "It's complicated and very big, and a lot of enforcement agencies will be interested."
Sen. Herb Kohl, D-Wis., chairman of the Senate antitrust subcommittee, said the same issues that prompted lawmakers to review the Google-DoubleClick deal exist in a potential Microsoft-Yahoo combination, including examining how it affects consumers, advertisers and businesses "who increasingly use the Internet for their news, commerce and entertainment."
If Yahoo accepts Microsoft's offer, the subcommittee expects to hold hearings to "explore the competitive and privacy implications of the deal," Kohl said.
Shares of Yahoo added $8.67, or 45 percent, to $27.85 in morning trading, while Microsoft fell $1.88, or 5.8 percent, to $30.72.