Google announced Wednesday it was walking away from an ad partnership with Yahoo to avoid a lawsuit with federal antitrust regulators, according to the New York Times. The move leaves Yahoo once again vulnerable to a merger with Microsoft. Marketplace's Lisa Napoli reported back in April that Yahoo wasn't so eager to go forward with that idea. Napoli also explored why Google didn't really want a Yahoo/Microsoft merger either.

Yahoo said it's disappointed Google won't defend the original game plan in court, but Yahoo said it's "well positioned to continue to compete in the search advertising market," according to the New York Times. Google said it tried to defend the deal, but in the end failed to sell the idea to regulators.

Will Microsoft move in? The Wall Street Journal reports the company is well poised to try.

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