Google's controversial search deal with Yahoo could hit a snag before it gets off the ground with news that the Justice Department has opened a formal investigation into the matter.

While officials at Yahoo downplayed the significance of the DOJ's decision to launch a formal investigation, The Washington Post is reporting that such a step could signal reluctance on the part of regulators to approve the deal.

"They don't do it without having identified significant issues," said M.J. Moltenbrey, a Freshfields Bruckhaus Deringer lawyer who was director of civil non-merger enforcement in the Justice Department's antitrust division in the 1990s. "It involves approval at higher levels within the antitrust division."

The deal, which came about as a result of Yahoo's efforts to beat back Microsoft's bid to acquire the slumping internet giant, has received mixed results from the interactive industry. Some advertisers have praised the deal, saying it will make for simplified media buys. But others have expressed concern that a smaller marketplace will result in price hikes for keywords. 

As for the investigation, The Washington Post also reported that Justice officials are expected to demand documents from Google and Yahoo, as well as other major online advertising companies.