Microsoft reportedly disbands Yahoo slate

Separately, top Google executives told reporters Thursday that the dominant Internet search engine is hopeful that it can put together a deal to place its text advertisements next to Yahoo's search results. Such a deal would boost Yahoo's revenue. Google makes as much as 70% more in sales from each search query than Yahoo, Yahoo said in March. Google executives declined to say how far along discussions are. Co-founder Sergey Brin said they offered an advertising partnership to give Yahoo "choices."

"They were under a hostile attack and we wanted to make sure they had as many options as possible," Brin said at a news conference at the company's Mountain View, Calif., headquarters. But Google was glad the deal was scuttled.

"We are happy that is not going to happen," Google Chief Executive Eric Schmidt said. He expressed concern that should Microsoft buy Yahoo, it would amass too much market share in e-mail and instant messaging and limit consumer choice. A long-term ad deal with Google probably would torpedo the chances of another Microsoft bid if Yahoo continues to struggle. The hopes for another bid and the prospect of a partnership with Google have buoyed Yahoo's stock.

Microsoft has said that a partnership between Yahoo and Google would harm competition in the online advertising market. Google executives said Thursday that they could structure an advertising partnership with Yahoo in such a way that would allay regulators' concerns. Analysts speculate that the partnership would be run as an auction, with other rivals having the option of showing ads on Yahoo.

The Justice Department is reviewing a two-week search-ad test by Yahoo and Google that concluded recently, and antitrust experts say a partnership would provoke intense scrutiny.

"We believe in companies' having choices about their destiny," Brin said. "Certainly with a [Silicon] Valley company like Yahoo, we think we want to support their ability to have a choice."

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joseph.menn@latimes.com

jessica.guynn@latimes.com

Menn reported from Los Angeles, Guynn from Mountain View.