San Francisco - Yahoo and Google are substantially narrowing their proposed advertising agreement to meet the antitrust concerns of the US Justice Department, according to reports Tuesday by the Wall Street Journal and the New York Times.

The new proposal shortens the term of the deal from 10 years to two years, and places a limit on the revenue that Yahoo can generate from Google to 25 per cent of Yahoo's search revenue, the reports said.

Under the deal, Google would place ads next to some Web search results on Yahoo and split the revenue with the ailing web giant.

Since Google's ads are more effective than Yahoo's at reaching interested consumers, they command higher prices and would significantly boost Yahoo's revenues.

Yahoo had estimated that the original deal would boost its operating cash flow by 250 million dollars, to 450 million dollars. The new terms could significantly cut that figure.

The two companies control more than 80 per cent of online advertising. A coalition of advertisers and competitors oppose the tie-up, saying it will reduce competition and lead to higher prices. (dpa)