According to the Wall Street Journal, Yahoo is ready to formally announce a deal to incorporate Google AdWords into its search results — potentially within a week. The deal could be part of a larger “open” system in which Yahoo serves the most lucrative ad in search results from its own platform, AdWords, or potentially other players, including Microsoft.

The challenge in making such an announcement with Google would be to structure the relationship in a way that avoided violating antitrust rules. Google, for its part, has previously argued that a deal with Yahoo would be analogous to its existing deals with IAC/Ask and AOL.

These discussions are being carried on against the backdrop of an imminent decision by Microsoft about whether to engage in a proxy fight for control of Yahoo’s board or whether to drop the acquisition bid entirely.

Microsoft CEO Steve Ballmer reportedly told employees today that the company would announce a decision “in relatively short order.” Yesterday the company indicated its willingness to raise its bid for Yahoo somewhat but has also said it’s willing to continue on without Yahoo.

For more discussion, see Techmeme.

Related Topics: Channel: Industry | Google: Partnerships | Microsoft & Yahoo Search Deal

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

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