Reported today in the Wall Street Journal, Yahoo and Time Warner’s AOL are talking about a deal that would combine internet operations. This action is in response to Microsoft’s un-solicited bid to buy Yahoo, which declined the offer. In response Microsoft has gone to News Corp, which owns MySpace.com in an attempt to put a joint deal together where they could buy out Yahoo.

The “Bigger News” may be the disclosure of an apparent defeat, Yahoo is talking to Google about outsourcing search ad sales for Yahoo’s advertising engine. Google has a large lead in market share on all add placement and sale revenue.