Google and Yahoo! have offered to significantly reduce the scope of their proposed advertising deal in order to stave off a pending antitrust suit from the US Department of Justice (DOJ). The DOJ has told the companies that they will face legal action unless they scuttle or revise their plans.

Google and Yahoo! announced their plan to have Google deliver ads to Yahoo!-based search queries in June, and the companies have repeatedly described the deal as "competitive." But Microsoft, other competitors, and various industry players have repeatedly petitioned antitrust regulators around the world to block the deal, which they say is unfair. Apparently, the DOJ, at least, agrees.

Under the revised terms submitted to the DOJ over the weekend, the deal would be shortened from 10 years to two years, and Yahoo! could only earn as much as 25 percent of its total advertising revenue as a result of ads delivered by Google; previously, there was no cap. The DOJ has yet to issue an opinion on the changes, sources say.

As recently as a month ago, Google offered up a fairly belligerent public face to the possibility of an antitrust block to the deal. But it's possible that the force of the DOJ's response surprised the company. Last month, Google backed down from previous claims that it would consummate the deal regardless of DOJ approval, and now the company is offering major concessions.

In somewhat related news, Yahoo! this week hired a former Microsoft executive to run its online media properties. Jeff Dossett will fill the position recently vacated by Scott Moore, who said he "had a great run" at the struggling online giant. His responsibilities include major Yahoo! portals like Yahoo! Finance, Yahoo! News, and Yahoo! Sports.