Wall Street Journal: Yahoo and Google May Become Search Bedfellows

The Wall Street Journal is reporting that Yahoo and Google are closer than ever to a deal where Yahoo would outsource their search monetization to Google. Google continues to do a much better job of producing revenue from searches - some estimates suggest that Google gets more than twice Yahoo's revenue per search click.

Yahoo also is continuing to negotiate with AOL as part of Yahoo's efforts to stave off a takeover by Microsoft.

The Journal suggests that Yahoo's April 22 earnings report may play a key role in the Microsoft takeover argument. If Yahoo comes in with strong earnings it will strengthen the idea that the Microsoft bid is too low, but if earnings are weak it will support Microsoft's efforts to force a Yahoo merger against the will of the current Yahoo board.

Disclosure: Long on YHOO