Silicon Alley Insider was reporting that a Yahoo-AOL deal was imminent. Now the site says that a source within Time Warner contradicted the imminent claim but says the parties are still talking. Meanwhile just a hop, skip and a jump from AOL’s Virgina headquarters, Google and Yahoo are seeking to head off a US Justice Department anti-trust action to block the paid search partnership between the two.

The Wall Street Journal conveys the impression that anti-trust ligitation is being activity prepared by the government and that it is all but certain unless Google and Yahoo can head it off at the pass with some concessions. (Microsoft has apparently been lobbying hard against the deal.)

That deal would potentially be further compromised by a Yahoo-AOL agreement, which would itself be subject to anti-trust scrutiny in the US and abroad. However, a Yahoo-AOL merger is less likely to be rejected than a Microsoft-Yahoo deal would have been in my opinion.

Although it would likely represent a very challenging integration, not far removed from the complexity of the former MicroHoo scenario, the economic stars are probably now aligned for a Yahoo-AOL deal of some sort.

Related Topics: AOL: General | Legal: General | Microsoft & Yahoo Search Deal | Yahoo: Business Issues

About The Author: Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling. See more articles by Greg Sterling