Updated from Wednesday, Nov. 5

SAN FRANCISCO -- Google's ( GOOG) decision to quit an online search ad deal with Yahoo! ( YHOO) could open up another takeover attempt by Microsoft ( MSFT).

Yahoo! CEO Jerry Yang said late Wednesday he's ready to return to the bargaining table with Microsoft ( MSFT) if Microsoft remains interested in buying the Internet company, the Associated Press reports.

"To this day, I believe the best thing for Microsoft to do is to buy Yahoo," Yang said Wednesday at the Web 2.0 summit in San Francisco, the AP reports.

Yang said he and the rest of Yahoo!'s board "remain open to everything" after Google abandoned the ad-search deal.

Google said Wednesday that after four months of review by the Department of Justice -- and despite revisions to the deal's terms -- "it's clear that government regulators and some advertisers continue to have concerns about the agreement."

"Pressing ahead risked not only a protracted legal battle but also damage to relationships with valued partners," wrote Google's legal officer David Drummond on the company's blog. "That wouldn't have been in the long-term interests of Google or our users, so we have decided to end the agreement."

The Justice Department acknowledged that it had planned to challenge the deal on antitrust grounds, claiming that under the arrangement, both Google and Yahoo! would account for 90% of the search advertising market.

"The arrangement likely would have denied consumers the benefits of competition -- lower prices, better service and greater innovation," said Thomas Barnett, assistant attorney general in charge of the Justice Department's antitrust division, in a statement.

Yahoo!, which in June entered into the search deal as a way to avert a merger with Microsoft, expressed disappointment in the decision.

"Yahoo! continues to believe in the benefits of the agreement and is disappointed that Google elected to withdraw from the agreement rather than defend it in court," the company said in a statement.

At the same time, the troubled Internet company put on a brave face, asserting that there is still hope for a turnaround.

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