A Microsoft and Yahoo search partnership deal imminent? According to Kara Swisher at allthingsd that's the word
Redmond is still laser-lock focused on breaking Google's grip over internet search & web advertising. Just consider the enormous launch of Microsoft's shinny-new toy: Bing. Now there's even twitter integration with "Bing Tweets" Early numbers show that Bing is making an impact is terms of sheer size and presence.
Hitting them on the other side of the advertsing equation will be the relaunch of Mircosoft's Ad Publisher "pubCenter" network. I've tried it out and it offers some pretty quick and easy-to-use tools and customizations to get some PPC ads on your site fast. The ad bloc at the bottom right is an example.
(Iroincally I've always wanted to serve Google adsense but have never been able to do it properly in 4 or 5 years that I've had an account. I tried again this week and found that the account was deleted. On top of that, I'm prevented from making a new one or contacting anyone at Google about it. Therefore, Google loses at least 1 potential publisher to Microsoft. I'm sure other people have had problems with the service and would like to look at alternatives too.)
Google's been the only good game in town for advertisers and the same goes for its AdSense network for web publishers.
With Bing off & running + a deal to be Yahoo's search partner- Microsft is finally hitting back at Google's core in meaningful way. Technology trends aside, It certainly seems that Microsoft could hurt google more directly in the pocketbook, than anything Google can do to them. (other than maybe just stealing mind share and a few news cycles with product announcements).
You don't see it being spun that way, but it seems like the case when it comes down to the business of how both companies make money.