Yahoo-Google tie-up may not be so close

When Microsoft was threatening to go hostile in its Yahoo bid, Google appeared close to a deal. Now that Microsoft has pulled its offer, things appear to have cooled considerably.

While such a deal is apparently still simmering, it appears to be relegated to the back burner and indeed, may or may not ever boil. Although Yahoo had hoped to have a deal ready to announce this week, that now appears unlikely, according to Marketwatch.

Folks I talked to on Monday offered similar sentiment. One of the hurdles in any deal is trying to craft an agreement that offers enough benefit to Yahoo, without raising too many antitrust red flags.

Analysts have said that a broad search advertising outsourcing pact could generate a substantial boost in cash flow for Yahoo, but it's unclear how large a windfall Yahoo would get from a more narrow pact. Among the possibilities said to also be under consideration are ones that would focus on only a portion of search terms, operate for a limited time, as well as ones that only operated in specific regions. In addition, the companies are said to be exploring options that might open Yahoo's search advertising to other companies, in addition to Google.

Yahoo and Google representatives were not immediately available for comment.