WebProNews

The end of Yahoo's discussions with Microsoft quickly gave way to a formal search advertising deal with Google. Rumblings over antitrust concerns followed on Capitol Hill.

In a wave of announcements, three major Internet players recast the search advertising industry. First, the talks between Yahoo and Microsoft came to an end, with Yahoo declaring there would be no more conversations about a sale of the company, in whole or in part.

Yahoo later announced it reached a deal with Google to place AdWords search advertising alongside its US and Canadian search results.

"I wanted to put this arrangement in perspective and comment on what it is and what it isn’t. First, it does not signal that Yahoo! plans to exit paid search," Yahoo CEO Jerry Yang said. "Second, this deal is good for competition."

He also claimed the non-exclusive deal with Google enables Yahoo to compete better with Google and other companies in the online ad market.

Yang will need to convince Senator Herb Kohl (D-WI) of the competitive virtues of their partnership with Google. Kohl's office issued a statement, saying, "This collaboration between two technology giants and direct competitors for Internet advertising and search services raises important competition concerns."

Translation: Yahoo should plan on keep some people free to chat with the Senate's Antitrust Subcommittee. Yahoo said in a statement the deal won't require regulatory approval, but they and Google will put it off for up to three and a half months while the Justice Department reviews it.

That timing works very neatly for Yahoo and Google, as the period ends just as heavy and lucrative holiday advertising outlays begin hitting their search ad coffers. The Feds, however, could drop a wrench in the works and delay it.

Google compared the deal to Toyota providing hybrid engine technology to GM, and emphasized the companies remain "vigorous competitors." Perhaps the two firms believe if they repeat it enough, people will believe it.

The deal ultimately repudiates the work Yahoo devoted to creating its revised search advertising engine, Panama, over a period of years. For them to gain nine figures in revenue through a contract with Google and the addition of some code to Yahoo's search results, it's hard to see Panama as anything but a failure now.