Mumbai: Google Inc proposes to push through its business deal with rival search engine Yahoo! and hopes to get regulatory clearance as it would be "non-exclusive" and falls short of an outright merger.

Yahoo has completed a two-week test of Google's system for selling ads alongside its own website to explore alternatives to Microsoft Corp's $44.6 billion takeover offer, which it rejected as being too low. (See: Yahoo to test Google AdSense; in alliance talks with AOL)

While the US justice department is questioning the companies about potential competitive issues raised by a partnership, Google said such a partnership, in which Yahoo would use Google's more profitable search advertising platform to make more money for itself, would not be anti-competitive.

Google has such arrangements with other web companies, including Time Warner Inc's AOL and IAC (InterActiveCorp), source said.

According to Google, a takeover by Microsoft of Yahoo should, on the other hand, raises far more antitrust concerns as the combined company could corner large chunks of multiple markets.

A tie-up between Google, the top search engine, and No 2 Yahoo would also give them a combined 80 per cent share of the market.

Microsoft's $44.6 billion offer for Yahoo hit a deadline on Saturday even as the the struggling internet pioneer rejected the offer as too low.

Yahoo's board of directors rejected Microsoft's $31 a share offer as it "substantially undervalues" the firm and said they would welcome an offer above $40 a share.

Ever since Microsoft announced its takeover proposal on 1 February, the two technology companies have been in a war of words through the media in a bid to gain the upper hand and sway investor opinion.

Microsoft chief executive Steve Ballmer has threatened to launch a hostile takeover of Yahoo if the companies had not concluded an agreement by today.

Microsoft's interest in Yahoo centers mainly on one the lucrative online advertising business and Google's seemingly unstoppable domination of it. A Microsoft-Yahoo combination would strengthen Microsoft in areas outside its core software business.