The potential deal between giants Google Inc and Yahoo Inc is under tight investigation from the European Union.

The EU made public its ongoing investigation which focuses on the proposed deal that will see Google’s advertising programs built into Yahoo's search engine in North America. Members of the EU Competition Commission said that, because the two giant corporations are also doing business in Europe, there might be anti-trust implications.

For Google and Yahoo, the news about EU’s review come on the background of heavy criticism from chief U.S. advertisers and a worldwide association of newspapers. The U.S. Justice Department is also carrying out an investigation of the deal.

The World Association of Newspapers criticized the potential Google-Yahoo deal because it would lower the cost of paid search ads which translates into lower incomes for the Web sites of newspapers as well as other sites. The Paris newspaper group, which represents as much as 18,000 newspapers, said that, if the deal is reached, it will give Google "unwarranted" market power.

"Competition among search engines is absolutely vital for newspapers - to ensure that no search engine can set monopoly prices for paid search ads, and to prevent any search engine from influencing users' surfing habits by manipulating unpaid search results," the newspapers group said in a statement.

If they seal the deal, the two advertising behemoths will control nearly 80% of the online advertising market. However, the deal faces a tough obstacle. The EU antitrust regulations are stricter than the one across the Atlantic Ocean.

If the deal is off, Yahoo has the most to lose. The Internet corporation intends to reach the deal with Google as an alternative to Microsoft’s hostile takeover bid. If Yahoo and Google shake on it, the Sunnyvale, Calif., company will get to remain independent and will most certainly increase its earnings. Yahoo estimated its earning will get $800 million/year higher after the deal is sealed.