Google Jump Ship, but what will Yahoo! do next?

Google has cancelled its ad deal with Yahoo! due to US government antitrust measures.

The search engines have announced that they no longer plan on working together to allow Google adWords ads to show up on Yahoo! search results.

The partnership which reportedly would have added $250 to $450 million annually to Yahoo will be a blow for the company who were hoping to benefit from the extra revenue following the takeover bid from Microsoft earlier this year.

This now leaves speculation on what Yahoo may do next. One option is for Yahoo to merge with the AOL part of Time Warner, whereas other speculation suggests that Yahoo may now be open to new discussions with Microsoft, with Jerry Yang reportedly saying at the Web 2.0 summit in San Francisco:

"I don’t think that is a bad idea at all, at the right price whatever that price is. We’re willing to sell the company."

There is still more to come with this story - watch this space!