Google may get three times more search traffic than Yahoo, but, SearchWiki aside, most of the innovation seems to be coming from Yahoo and Microsoft’s Live Search as they strive to gain a larger slice of the search market share.

Last year Yahoo introduced Search Assist, an advanced autocomplete feature that recommends related searches as you type your query into the search box. Autocomplete isn’t a new concept – Google has offered it for years through Firefox and its browser toolbar (and recently integrated it into its homepage). But Yahoo takes it a step further, going beyond just guessing what word you’re typing by suggesting possible related searches.

Today the site is introducing thumbnail previews for its image searches, allowing users to see how they should modify their queries to get the set of images they’re looking for. For example, typing “Obama” presents suggested searches for “Obama family”, “Barack Obama”, and “Michelle Obama”, each accompanied by a thumbnail indicative of what the query will yield. After trying a few searches of my own it’s easy to see how this could come in handy, especially when it comes to searching for queries with multiple, very different meanings (like “Sierra Nevada”, the beer or the mountain range). That said, the feature is a little quirky – oftentimes I had to refresh the page if I wanted any suggestions to appear.

Meanwhile, earlier this week Microsoft’s Live Search introduced the ability to use an image itself to search for similar images.

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When Google pulled out of its proposed search advertising deal with Yahoo last month, it was chief legal counsel David Drummond who made the announcement. He cited concerns of a “protracted legal battle,” but only now do we learn that the Justice Department was only three hours away from filing an antitrust lawsuit to block the deal. Sandy Litvack, the prosecutor hired by the justice Department to head up the case, tells Am Law Daily:

We were going to file the complaint at a certain time during the day. We told them we were going to file the complaint at that time of day. Three hours before, they told us they were abandoning the agreement.

It would have ended up also alleging that Google had a monopoly and that [the advertising pact] would have furthered their monopoly.

When it came down to the wire, Google blinked. It was the right move. But Google is on notice that the DOJ considers it a near-monopoly, and will treat it as such if need be. At least until the Obama Administration takes over. Then Google CEO Eric Schmidt can remind them how hard he campaigned for them to win.

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