Following the resignation of CEO Terry Semel and changes in senior positions at Yahoo!, there's been much speculation on the future direction the company will now take. The New York Times thinks the unthinkable, that Yahoo! could outsource their search service to Google and then focus their efforts on developing their portal business and other online services, rather than compete, and fail, against Google's strong position.

One strong rumour is a merger with MySpace, which would give Rupert Murdoch's News Corporation a 25% stake in Yahoo!. However, the search business remains a core strength of Google and it seems inconceivable that they would throw in the towel and succumb to Google's dominance in this field. Having said that, the original Yahoo! product - their directory - has largely disappeared from view as the business has needed to adapt to the growth in the web.

For searchers, and companies trying to drive business from search, such a merger of search services would be a bad thing as the variety of search offerings and the opportunities to gain search visibility become more polarised. Yahoo! would also be likely to lose their PPC income since any deal with Google is likely to include PPC adverts. However, estimated figures show that Yahoo! would probably make more revenue by outsourcing search to Google, so perhaps hard cash will force the decision here.

Meanwhile Microsoft looks on, having recently been mooted as a partner for Yahoo!, so as the 'big 3' continue to manoeuvre for position in the search and online advertising market, it remains to be seen how drastically the landscape will change over the coming months and what impact any changes will have for users and advertisers.