The Federal Trade Commission (FTC), which had been expected to wrap up an anti-trust probe into Google within days, will now delay its decision for weeks, a source said on Tuesday.
Google has been accused of giving competitors in lucrative areas like travel a lower ranking in search results, thus making it harder for their customers to find them. Google has repeatedly denied any wrongdoing.
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FTC Chairman Jon Leibowitz had hoped to wrap up the long-running investigation this month.
Talk of a potential settlement in recent days had suggested Google would emerge from the more than two-year probe with little more than a slap on the wrist from the commission.
The delay, first reported by The Wall Street Journal, came after the European Union took a hard line with the search engine giant on Tuesday in a parallel investigation.
The EU's antitrust chief, Joaquin Almunia, gave Google a month to come up with detailed proposals to resolve a two-year investigation into complaints that it used its power to block rivals, including Microsoft.
The European Commission has been examining informal settlement proposals from Google since July but has not sought feedback from the complainants, suggesting it is not convinced by what Google has put on the table so far.
Google's critics have accused it of a long list of wrongdoing - everything from putting its own products high up in search results to bring them business to "scraping" reviews of hotels and restaurants from other sites for its own products.
Google had reportedly been prepared to make some changes to its business practices to secure an end to the FTC investigation but had balked at allowing regulators to interfere with its search algorithm. The company was also apparently prepared to make concessions on certain patent infringement lawsuits.
(Reporting By Diane Bartz; Editing by Ros Krasny and Michael Perry)