Summary:

While the *Google*-*Yahoo* search ad pact seems increasingly headed for rocks, the two sides have continued to insist that they’re talking w…

While the *Google*-*Yahoo* search ad pact seems increasingly headed for rocks, the two sides have continued to insist that they’re talking with the Department of Justice about crafting an agreement that passes regulatory muster. Until now, it seems. Citing unidentified sources, the WSJ says those talks have not moved the ball an inch and suggests that Google (NSDQ: GOOG) and Yahoo (NSDQ: YHOO) may abandon the pact completely. The decision to drop the planned deal could come as soon as next week, the WSJ says — although hedging its bets, the paper adds the two could go the other way and announce a last-minute save.

What makes next week so important and why does it seem like such a toss-up? It could have something to do with Tuesday’s presidential election. The thinking could be that an Obama win — which would be at least personally supported by Google CEO Eric Schmidt, an avowed Obama supporter — would probably signal a more jaundiced view of what constitutes anti-competitive partnerships. And a McCain win could mean that antitrust regulation would remain fairly loose.

And as Google-Yahoo continues to dangle, the specter of the Yahoo-*AOL* tie-up has reared its head again this week. Though a Reuters source said AOL (NYSE: TWX) and Yahoo were conducting “due diligence” of each other’s finances, other sources told our Staci D. Kramer that was an exaggeration and that no deal there was imminent.

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