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May 8 2008 4:34PM EDT

Jerry: You Wanted Independence, So Back Away From Google Slowly...

Reports, rumors and innuendos are bouncing around the Web that Google may not want to cut an advertising deal with Yahoo after all. This before there is actually substantiation that Google and Yahoo are crafting an advertising deal, which was something of a rumor and innuendo in the first place, allegedly planted to let Microsoft know that Yahoo had options.

Google is allegedly worried about ticking off Washington officials who might think that if Google is playing ball with Yahoo, Google has become an antitrust violator that must be terminated. Like, as if Google isn't already close to monopoly power in search. It gets 67% of all searches, and that share keeps growing. Google worrying that a Yahoo deal will push it over the brink in antitrust is like Kim Jong-il worrying that if he puts on a party hat he'll be considered crazy.

Then there's the other side: If Yahoo enters into this kind of crossroads deal with Google, it will be short-term gain for long-term pain. As I wrote in April when this idea was first floated:

You hand your search advertising to Google and you essentially belong to the Google camp for good. Google money is like heroin. This is what AOL discovered when it did the same. Now AOL gets so much revenue from Google, it has no other options. If AOL wanted to be bought by Microsoft, for instance, and start using Microsoft search, AOL's revenues would go off a cliff. Yahoo would similarly find itself penned in strategically. All its growth options would also help its chief rival, i.e. Google, grow. What kind of existence is that?

If Yahoo does a Google partnership deal...Yahoo truly will be the next AOL.

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