The Google-Yahoo ordeal is far from being over, and while some regulators fear the deal may interfere with the online advertising market and create an unwanted and unfair monopoly, others believe the two search giants should be given a chance for the sake of the online advertising market and electronic commerce.

In a letter sent by 11 California members of the U.S. House of Representatives to Attorney General Michael Mukasey, the lawmakers express concern over the possibility of a lawsuit filed by the Department of Justice against the online advertising agreement between Google and Yahoo. According to them, this would create unprecedented effects that would detrimentally affect the online advertising market.

Furthermore, the lawmakers highlighted the fact that the deal will not affect Yahoo’s search results, nor will it interfere with the way the search engine works or displays results. And while some fear than this is the perfect opportunity for Google to take over 90 percent of the search-based advertising market, “this is simply not the case.” They also underlined something Google and Yahoo have been trying to get through: “the agreement is not a merger and therefore does not grant exclusive control of online advertising to wither Yahoo or Google.”

The letter argues that while taking preemptive action against a non-exclusive contractual agreement would be a first for the Department of Justice, such agreements usually take place in many industries and standard among Internet companies. “In fact, Microsoft had a similar agreement with Yahoo and Google has similar arrangements with tens of thousands of companies.”

In June this year, Google and Yahoo revealed a non-exclusive advertising agreement that would allow Google to put some of its search ads on Yahoo pages. The deal is intended to provide better ads that will benefit advertisers, publishers, and consumers. However, the potential impact of the agreement was, as expected, a very discussed one.

In order to settle the matter straight, Google and Yahoo agreed to a three-month period for the Antitrust Committee to investigate the partnership, but instead of smoothing the path, they stumbled upon fears that they might monopolize the market, diminish competition, as well as create an advantage for the two search giants over user information.

All these accusations and concerns resulted in Google launching a website dedicated to this partnership and to answering delicate questions about the terms of the deal and the impact of the deal on advertisers, ad pricing and competition.

Last week, the American Antitrust Institute released a list of arguments suggesting there is also a positive side to the agreement, and with the right legally enforceable requirements, the government could approve the deal. Furthermore, AAI suggested that by prohibiting the agreement between Google and Yahoo, there is a high risk of eliminating the potentially positive effects of the proposal, including the strengthening of Yahoo’s position as a competitor.

The California lawmakers also argued that the deal will not harm competition, as the “disruptive nature of the Internet makes it extraordinary difficult for any company to dominate.” The potential of the market remains huge, and its rapid growth increases the potential for even more competition.