Google (NASDAQ:GOOG) and Yahoo! (NASDAQ:YHOO) still want their deal for the large search engine company to sell search advertising for the large portal company. Yahoo! knows that Google's system for selling these ads is more efficient. Yahoo! should make more money under the arrangement.

But, almost every large advertiser in the US and Google's competitors want to block the partnership. They don't want Google to have broad pricing power over search. It has about 65% of the market and Yahoo! has another 20%. According to The Wall Street Journal, "Advertisers have told Justice Department officials that the partnership will limit competition, raise prices and reduce choices."

The Justice Department, which has to review whether the deal works under antitrust laws, is getting itchy.

So, what happens? If Google has any sense, it will throw Yahoo! under the bus and walk away. Google stands to get in real trouble with Justice if the government decides to look at the company's share of search even without the Yahoo! deal. It is better off leaving quietly. Google is not likely to make a huge amount of money from selling ads for Yahoo! since the money will be split between the two companies.

Yahoo!, which is struggling to improve revenue and with its stock near a 52-week low, needs the new sales from Google. And, if the larger company exits the deal, Yahoo! has a major problem.

Douglas A. McIntyre is an editor at 247wallst.com

For a long time now, when it comes to search engines, Google Inc. (NASDAQ: GOOG) has been the king of the hill, and a new survey shows that Google extended its lead once again during August, taking valuable traffic away from its main competitors Yahoo (NASDAQ: YHOO) and Microsoft (NASDAQ: MSFT).

According to comScore, Google increased its dominance during August by attracting 63% of all search engine traffic, up from 61.9% during the month of July. comScore's data was based on 11.7 billion searches in the month, and shows that Yahoo and Microsoft are still unable to tap into the valuable search engine traffic that Google maintains.

Yahoo scored a very distant second place, with 19.6% of all search engine traffic. This was a drop of 0.9% from its July figures. Third place goes to Microsoft, who scored 8.3% of search engine traffic during the month, down 0.6% from the previous month.

It looks like Skype is not the only bad acquisition for e-commerce giant eBay (NASDAQ: EBAY) lately, as TechCrunch is now reporting that eBay is looking to dump another recent acquisition, StumbleUpon.com.

According to TechCrunch, eBay has hired Deutsche Bank to help the company unload StumbleUpon, a website recommendation service that it acquired a little over a year ago, back in May 2007.

At the time that eBay purchased StumbleUpon, it paid $75 million for the company, and it is pretty doubtful that it is going to be able to sell it for that amount, probably far less due to the inability to grow its popularity over the past 16 months.

Google Inc. (NASDAQ: GOOG) can't pick up market share on the locals in some places including Russia, China and Japan. Relatively small search companies in these countries hold pieces of the search business that are often above 60%. If Google is going to continue its march toward world domination, it cannot let a bunch of tiny competitors get in the way.

According to the FT, "Baidu in China and Naver in South Korea each handle about 60 percent of internet searches in their respective countries." Google faces significant problems because these markets are growing quickly, unlike the U.S. and Europe where internet use is flattening. Local language products already have brand recognition and systems that work well in local languages.

The news is even worse for Yahoo! (NASDAQ: YHOO). With its share of the American search market shrinking, it has little recourse beyond trying to improve its overseas presence and to pick up search share on mobile devices. Yahoo does own part of Yahoo! Japan, but it does not have a meaningful market share in any other large country.

Google has a problem overseas, but Yahoo! has a disaster.

Douglas A. McIntyre is an editor at 247wallst.com.

The U.S. government is looking into whether the partnership that would allow Google (NASDAQ: GOOG) to sell search ads on Yahoo! (NASDAQ: YHOO) is anticompetitive. The two companies have over 75% of the search market in the U.S. European Union regulators have also started an investigation.

Now the real piling on has begun. According to The Wall Street Journal, The World Association of Newspapers is opposing the deal because "the agreement would reduce the cost of paid search ads and lower revenues for newspapers' and others' Web sites." That adds a bit of confusion. Marketers oppose the deal because a monopoly would raise rates and cost them more money.

The future of the agreement is now being challenged from a number of sides for a number of reasons. If the pressure becomes great enough, Google may simply walk away. Selling advertising for Yahoo! may be a good business, but it is not likely to balloon the search giant's earnings.

Yahoo! is another matter. It needs improved revenue from search ads to make the case that it should stay independent and that is can drive earnings up on its own.

Without Google, Yahoo! has a very modest future. At $18.85, Yahoo! trades near a 52-week low. Without Google, the shares could go much lower.

Douglas A. McIntyre is an editor at 247wallst.com.

There have been concerns that the rate at which people clicking on the text ads next to Google (NASDAQ:GOOG) search results has been falling. These concerns caused spirited debate before the company's last earnings report and may have even pushed the firm's stock price down. But earnings were excellent, and much of the fear went away.

Now it turns out the Google ads are doing better and better, and clicks on ads at rivals are falling. The Wall Street Journal, using comScore (NASDAQ: SCOR) data, reports that Google's performance improved in April and "Paid clicks for Microsoft Corp (NASDAQ:MSFT) and Yahoo Inc (NASDAQ:YHOO) meanwhile declined during the month, according to the data." The paper reports that Google's performance in the U.S. was 20% ahead of expectations.

Good for Google, but very bad for its two chief rivals. The information indicates that even if Microsoft buys Yahoo!, the combined operation will have a much smaller market share in search than Google, and its advertising will perform worse. If Microsoft and Yahoo! stay separate, their uphill battles could face extremely long odds.

From all the data available, Google's search technology brings back better results for consumers. Its technology for matching ads to searches also appears to work much better. The fight for the domination of this critical portion of the internet is over. The only question is whether the second and third place firms can make money long-term.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

Anyone who did not think a Microsoft (NASDAQ:MSFT) buyout of Yahoo! (NASDAQ:YHOO) has become less likely should have stopped by the All Things Digital conference. According to Reuters, "Yahoo Inc Chief Executive Jerry Yang said on Wednesday a potential deal with Microsoft has tremendous power, but the software giant appears no longer interested in a full merger."

The leaves Yahoo! management, its board, and takeover artist Carl Icahn in a tough spot. Many analysts believe that without a deal, the Yahoo! shares could drop back near $20, where they traded before the offer from Redmond. Yahoo! currently changes hands at $27.

The news is a sign that Microsoft thinks it can do almost anything on its own, including challenging Google (NASDAQ:GOOG) in the search business. Gates, Ballmer & Co. have the money to get the engineering hands on board to push better search tech, but user loyalty to Google may be so great that even a much better product from Microsoft will not break its rival's hold on the market.

Microsoft has had success exceeding the market's expectations before. No one believed that the company's Xbox could challenge the Sony (NYSE:SNE) PlayStation franchise.

But, search engines are not game consoles and the rules in one game do not necessarily apply in another.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

All eyes will be on Yahoo Inc. (NASDAQ: YHOO) as it reports quarterly results later today.

Analysts are expecting profit of 9 cents on revenue excluding payments to partners of $1.32 billion, according to Thomson Financial. But that is secondary.

Wall Street wants Yahoo Chief Executive Jerry Yang to prove why the Internet portal is worth more than the $31 per share Microsoft Corp. (NASDAQ: MSFT) has offered. To say investors are skeptical that the Sunnyvale, Calif.-based company can do any better is an understatement.

"They're just trying to save some face and extract some value out of it for shareholder," said RBC Capital Markets analyst Ross Sandler in an interview with Bloomberg News.

Indeed, Bloomberg points out that Yahoo's net income probably fell for the ninth straight quarter. Microsoft CEO Steve Ballmer said that the results -- whatever they may be -- won't affect Yahoo's value to the software giant. Though he hasn't ruled out LOWERING Microsoft's bid, chances are remote that will happen.

The deal for Yahoo! (NASDAQ: YHOO) to allow Google (NASDAQ: GOOG) to sell text ads on the portal's search pages may happen more quickly than most analysts believed. According to The Wall Street Journal, "Yahoo Inc. moved closer to outsourcing its search advertising to Google Inc. after an initial test of the system yielded what the two firms deemed positive results."

The partnership could add several hundred million dollars of revenue to Yahoo!'s annual numbers. Most observers believe that regulators would be troubled by the two largest search companies joining forces.

The news still begs that question of whether any deal can be better than Microsoft's (NASDAQ: MSFT) offer to buy Yahoo! for over $29 a share. The first offer was at $31, but Microsoft's shares, part of the payment, have declined since then.

Yahoo!'s actions to run away from Microsoft seem to go along the lines of trying to stay independent for the sake of being independent. In other words, the company has no answer to the question of why investors are better off if Yahoo! stands alone.

Since no one other than Microsoft wants to buy the portal, the answer is that Yahoo! has lost all options to defend its present strategy. A deal with Google does not, in any way Yahoo! can explain, make the company worth $30 a share.

Douglas A. McIntyre is an editor at 247wallst.com.

Google's (GOOG) shares continue to be stuck below $500 where they have been since late February. Part of the reason for the fall is that comScore data showed that the number of people who clicked on ads at the big search engine was weak in January.

It looks like the stock will drop again as "click rates" for Google ads rose only 3% in February when compared with the figures for the same month last year. According to MarketWatch: "Google reported 25% growth in paid clicks in its fiscal fourth quarter ended in December. But comScore data released last month showed flat growth in Google's paid clicks in January." Now, investors can ponder another piece of bad news.

The easy answer to the Google data is that a recession is slowing down advertising activity everywhere. Google carries millions of ads in its AdSense program, so it would make sense that it should suffer some fallout.

But, the answer may be more troubling than that. Readers of Google's search pages may be discovering that the text ads next to the listings are from marketers trying to take advantage of people looking for information by clogging pages with related messages. As more people understand the system of targeting based on search results, fewer are willing to be sucked in by companies trying to reach them due to their behavior.

If the Google system of matching ads to search results is putting its customers off, that would be worse news than the effects of a recession.

Douglas A. McIntyre is an editor at 247wallst.com.

Steffen Mueller's past gig was as a product manager at Google (NASDAQ: GOOG), working on Google Maps, Froogle, and Google Web Search. Well, now he's got his own venture: Topicle.

And yes, it's focused on the massive search business. Think of it as Google meets Wikipedia. Essentially, Topicle relies on the efforts of users, who collect helpful web links. These are based on voting, using a 1-5 scale.

Ironically enough, Topicle is in a way a move to the past. After all, when Yahoo! (NASDAQ: YHOO) got its start, the search results were primarily based on the decisions of, well, people.

In theory, Topicle makes sense and should result in relevant results. However, it's going to be tough to get critical mass, especially in light of the many search options available for users. Besides, building a site that's based on user participation is never an easy thing to do.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

In November internet search engine rankings by comScore (NASDAQ: SCOR), Google (NASDAQ: GOOG) again lead the pack, with 5.9 billion core searches conducted -- a 58.6% market share of all searches in the internet. This was almost the exact same level as October.

Coming up a distant second (as usual) was Yahoo! (NASDAQ: YHOO) with market share of 22.4%. The next three were Microsoft (NASDAQ: MSFT) at 9.8%, IAC/InterActiveCorp.'s (NASADAQ: IACI) Ask.com at 4.6% and Time Warner's (NYSE: TWX) AOL at 4.5%. In November (a seasonally weak month for web searches), U.S. web searchers conducted 10 billion searches -- a 5% decline from October.

Do these rankings surprise any web surfer? They shouldn't -- Google continues to dominate internet searches and Yahoo!'s Project Panama -- although technically a job well done -- is probably too late to the party to put any significant pressure on Google. Microsoft's Live Search push has garnered it about the same market share as in the past (a decent third place). The power of first-mover advantage is quite evident in Google's placement, and I'd suspect it's not going anywhere soon.

IAC InterActive (NASDAQ:IACI)'s Ask.com has about 5% of the U.S. search engine market -- not much.

But the internet property is going to try to go against the trend. Instead of taking data from customers to target ads, Ask.com will let users "hide" their search data to promote privacy. The company is launching "AskEraser," which will destroy all personal information about a user.

According to The New York Times, unlike typical online privacy controls that can be difficult for average users to find or modify, people will be able to turn AskEraser on or off with a single click."

The privacy police will probably be very happy about the announcement. But it takes a big targeting tool away from Ask, and Ask can use all the help that it can get. It has tried and tried but has had no success in prying search share from Google (NASDAQ: GOOG) or Yahoo! (NASDAQ: YHOO).

The move by Ask is based on the premise that most people care if search engines collect data on them to better target search results and advertising. Since very few people opt out of programs that collect data online, the answer is that almost no one gives a damn.

Douglas A. McIntyre is an editor at 247wallst.com.

Shares sold short in Google (NASDAQ: GOOG) rose 56% in June compared to the May figure to hit 6.2 million.

The reason may be as simple as the nearly 10% rise in the company's shares over the last month. In the two months prior to that, the search giant's shares rose very little.

Stumbles at rival Yahoo! (NASDAQ: YHOO) and increases in Google's market share as seen in data of major research firms including HitWise and comScore have added to the market's perception that the firm's presence in search is so large that rivals have absolutely no chance of catching it.

But big growth almost always comes with some level of uneasiness. At $530, the stock is near an all-time high. While the company's revenue has recently grown over 60%, some analysts wonder when the increases in search-based text ads will start to come back to earth as it did in online display advertising started about two years ago.

The short position indicates that there are some who are willing to bet that Google's slower growth is nearer than that market expects.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Google (NASDAQ:GOOG) built a better product, and now the world's merchants are shoving money in its pockets as fast as they can. This hasn't escaped the attention of Jimmy Wales, founder of the astonishingly successful, volunteer-created Wikipedia. He has been kicking around the idea of a wiki-developed search engine for several years. Yesterday in a Tokyo news conference, he reiterated his intention to pursue the search market through his for-profit spinoff company, Wikia Inc.

While Google is using their head-start and the cash infusion from their IPO to race into new web-based technologies ahead of other massively-funded competitors Microsoft and Yahoo, Wikia could be a different kind of competitor. Think mercenaries vs. zealots.

Certainly Wales will have no trouble finding investors to fund such a project. In fact, he may already all he needs -- Amazon has already dumped a load of cash on his doorstep, and other investors have sent $4 million his way. Although Wikipedia operates as a not-for-profit organization, investors drool when they dream of the dollar value of the site, the most often visited as a result of a Google search. The traffic to Wikipedia has grown by 680% in the past two years.

Wales has shown he knows how to organize large groups of volunteers to develop open source media. While this might be a long shot, who would have bet on a horse named Google in 1998? Time will tell if the wiki hive-mind can create something better than the highly-paid minds of the Google empire. Empires have fallen before in the face of hoards all focused on a single purpose.