- Mike Shields, Mediaweek

NEW YORK Yahoo! has declared that any chance of a Microsoft acquisition or search partnership is now officially off the table, just as rumors began to swirl that the embattled portal is set to announce an expanded partnership with Google.

In a statement today, Yahoo! officials said that after months of speculation, as well as multiple formal meetings between the two companies, talks have officially concluded. Though Microsoft had in recent weeks publicly backed off its original effort to buy Yahoo! outright, the two companies were exploring a search advertising relationship -- including the possibility that Yahoo! would dump its own Panama search ad platform, with Microsoft taking over Yahoo!'s search ads sales.

That scenario did not come to fruition, as Yahoo! now says it is too important for the company to keep search and display advertising sales together. According to a statement, Yahoo!'s board concluded that "such a transaction would not be consistent with the company's view of the converging search and display marketplaces, would leave the company without an independent search business that it views as critical to its strategic future and would not be in the best interests of Yahoo! stockholders."

Meanwhile, several prominent blogs, including Techcruch.com, are reporting that a Yahoo!-Google search partnership is imminent. Back in April, Yahoo! conducted a limited test during which it served Google-provided search ads to a small portion of its user base. That fueled speculation that if the test were successful, Google might assume complete control of Yahoo!'s search advertising business.

That's a scenario that many media buyers have said they do not support, given that it would turn Google from a category dominator to an out-and-out monopoly. According to comScore, the combination of the two companies' search business would create a market share of 82 percent for Google -- a situation that does not necessarily facilitate competition, say many observers.