Google and Yahoo think their search partnership should easily pass the U.S. Justice Dept.'s sniff test, which was formally announced yesterday. They claim the deal is not a merger, it covers only a small part of Yahoo's search business and it's not exclusive, meaning third parties (i.e. Microsoft) are welcome to strike similar deals. In fact, Dana Wagner, Google's competition counsel, says the deal was structured not to raise anti-competition concern. Not so fast, says BusinessWeek writer Catherine Holahan. You can be sure that antitrust officials at the DOJ will give the deal a thorough examination. The case against it …

Kara Swisher reports that Yahoo is contemplating handing over two board seats to Carl Icahn in an effort to appease the corporate raider. Problem is, Icahn wants at least four. Four seats would certainly give Icahn enough power to make big changes at Yahoo, including the possible removal of CEO Jerry Yang. Icahn has loudly and repeatedly said he plans to replace the Yang and other Yahoo execs after he takes control of the Yahoo board. To do so, Icahn will have to win a proxy battle, which will be waged on Aug. 1 at Yahoo's annual shareholder meeting. …

What is Microsoft thinking with its purchase of Powerset? Read Write Web's Alex Iskold thinks the software giant plans to mimic Powerset's Wikipedia solution by incorporating its technology into Internet Explorer. This might be a powerful idea if Powerset's actual technology were better, Iskold says. Indeed, most reviews of the semantic search engine have been lukewarm at best, making the $100 million price tag somewhat surprising. But Iskold says that Powerset's technology also has tremendous potential. It doesn't try to search the Web as a whole; rather, it attempts to understand content on the page. This could be very …

Yahoo's stock price has come full circle in the five months since Microsoft lodged a $31 per share bid for the company. Now, it seems, so have the talks. One day after The Wall Street Journal revealed that Microsoft was exploring the possibility of another move for Yahoo, the paper now claims that Yahoo is once again entertaining other potential suitors, including Time Warner's AOL. The two companies are once again discussing folding AOL into Yahoo in exchange for giving Time Warner a minority stake in the combined venture. Not far from those talks are renewed discussions between Yahoo and …

The Wall Street Journal reports that Microsoft may join forces with the likes of Time Warner and News Corp. In making a run on Yahoo's search business that would ultimately call for the Internet giant to be split up. Microsoft had previously discussed arrangements under which it would acquire Yahoo's search business while News Corp.'s MySpace or Time Warner's AOL would combine with what remained of the company. However, sources say the talks are preliminary and are unlikely to result in a deal. The Journal also claims that Yahoo in May offered to sell itself to Microsoft for $33 per …

Chris Andersen's book "The Long Tail" has been regarded as a sacred text among many Internet industry execs since it was first published in 2006. In it, Andersen claims that the Internet is shifting society away from mainstream media "hits"--products that sell enormously well and appear at the top of the demand curve--toward an expanding number of niche products appearing in the curve's long tail. Thus, "narrowly-targeted goods and services can be as economically attractive as mainstream fare," Andersen said. However, a new article from Harvard marketing professor Anita Elberse offers evidence that mainstream "hits" are not going away. In …