Google, Yahoo! Pact Looks Likely

A source notes that in most of the scenarios discussed between the two companies, Yahoo! would only outsource some of its ads to Google, retaining the rest for its own business, along with the option of outsourcing to other companies if it chooses. The arrangement would be similar to that between Google and Ask.com, a division of IAC/InterActive Corp(IACI Quote).

This might alleviate antitrust concerns, but probably not enough to placate Microsoft, which has repeatedly spoken out against any tie-ins between Google and Yahoo!. Microsoft has maintained that any arrangement between the two would consolidate over 90% of the search advertising market in Google's hands.

Yahoo! had previously outsourced its online ads to Google before coming up with its own system called Panama. But its attempts to monetize search -- as well as any other company in the industry -- never came close to Google's success.