• by Wendy Davis , Staff Writer @wendyndavis, February 7, 2007

Google and Fox Interactive reportedly have hit a roadblock in an ad deal initially forged last summer.

Today's Wall Street Journal reports that Google and MySpace have never closed the $900 million, three-year pact for Google to power searches on MySpace and serve display ads on the site.

That article comes on the heels of a post in Techcrunch Friday stating that some executives thought this summer's initial agreement was struck "too hastily" and were pushing for changes in the terms.

The Journal says that MySpace's e-commerce ambitions threaten to delay the finalization of the Google deal. MySpace apparently wants to use eBay's technology and its PayPal electronic payment system to enable users to buy and sell items via their MySpace profiles. But Google, meanwhile, is busy promoting its own rival electronic payment system, Checkout, while also building out its online classifieds.

The Journal also says that the $900 million ad revenue deal isn't likely to be derailed, as Google began powering searches on the site last year and also started paying MySpace a portion of the revenue.

Google's Eric Schmidt obviously doesn't want people to believe the deal is in jeopardy. He told the Journal that the companies have been operating under a "binding" letter of intent and the "final paperwork" isn't likely to result in any major changes.

Still, most of the time, companies have room to change their minds even after signing letters of intent. Despite the hedging, the article certainly raises the prospect that the Google/MySpace ad deal -- one of last year's largest -- might come undone.