Yahoo and Google have agreed to delay their online search ad partnership to give the Justice Department more time to evaluate the deal.

Spokesmen from both Yahoo and Google confirmed the delay.

Although Google execs have been especially adamant that the arrangement was going forward no matter what, the move is not surprising, given the increasing opposition to the deal involving the No. 1 and No. 2 online search leaders.

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Yesterday, BoomTown wrote a piece about Yahoo’s worries about the scrutiny that the monopolistic combination of Yahoo Mail and Microsoft’s Hotmail would get, if it merged with the software giant.

The issue–which has not gotten a lot of attention–is actually a major sticking point in the price negotiations going on this weekend between the companies, as Yahoo seeks solid downside protection if the deal becomes mired in approval issues by governmental authorities due to email and instant messaging dominance on the Web.

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So why is Yahoo’s board holding out for a higher price than Microsoft wants to offer to raise it?

According to sources close to Yahoo, one of the more important reasons Yahoo wants a higher price has a lot to do with worries about the domination of the email and communications market if a merger with Microsoft took place and the threat of regulatory action that would force the companies to divest those assets.

Sources said that Yahoo wants a large cushion in case the government finds the combination of Yahoo Mail and Hotmail too much.

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