Search Biz: Ballmer Talks Yahoo Deal; Google Slows Down In NC & Fires Back At Net Neutrality Critics

In a fairly lengthy interview this morning, Microsoft CEO Steve Ballmer tells the Wall Street Journal that he’s still interested in a deal with Yahoo, but says there are no talks happening right now. Perhaps to get that ball rolling again, though, Ballmer says a deal “would probably be better for both us, and certainly for Yahoo, if we were to do it sooner than later.”

He also reiterated that Microsoft can compete with Google without it, but outlined what he sees as the benefits of a deal with Yahoo:

“…the fundamental basis for doing the search deal with Yahoo has to do with critical mass in the advertising marketplace. It doesn’t have to do with technology, or any of these other things, it really is a market phenomenon. Together we would have more advertisers….which means we’d have more relevant ads on our page. We’d have higher monetization levels possible in front of us because there would be more people bidding on more key words. Most importantly, Google would have perhaps a real credible competitor sooner.”

Newly-hired Dr. Qi Lu is also interviewed, but he doesn’t specifically address the proposed MSFT-Yahoo deal itself. He did tapdance around a question about what it was like to be working at Yahoo during the previous acquisition talks:

“With regards to the acquisition, certainly the management team and the board of directors made their decisions, and we all know about that now. Sometimes the employees, different people have different views. That’s perhaps all I have to say.”

Another casualty of the current economy appears to be Google’s physical expansion. According to the Business Journal, Google has backed away from a $4.7 million state grant to help build a new data center in North Carolina. The center itself is already being built, but construction has stalled and Google has reportedly said it won’t re-start “for a while.” According to the Business Journal article, Google has told state officials that, because of “volatile economic conditions,” they don’t know when the data center will be finished.

North Carolina has bent over backwards to help Google build and expand in the state. We’ve reported previously about the tax breaks and other incentives Google is getting from North Carolina, about Google wanting the state to be quiet about those tax breaks, and about a lawsuit filed because of the tax breaks.

Finally, look for the Net Neutrality battle to heat up in 2009 and for Google to be heavily involved. Scott Cleland, who’s getting paid by major telecommunications companies in opposition to Net Neutrality, published research this week claiming that Google uses 21 times more bandwidth than it pays for, and that the public’s Internet costs would be more affordable “if Google paid its fair share.”

Richard Whitt, a Google attorney, fired back on the Google Public Policy blog, borrowing the term “payola punditry” from another blogger, and adding that Cleland “made significant methodological and factual errors that undermine his report’s conclusions.”

As CNET notes, this debate isn’t going to end anytime soon.