The on-again, off-again courtship between Microsoft and Yahoo Inc. seems to be on again now that Yahoo Chief Executive Officer Jerry Yang is expected to step down. Board members began pressuring Yang to bounce after the Microsoft deal crumbled in May.

SAN FRANCISCO -(Dow Jones)- Yahoo Inc. (YHOO) may finally negotiate a search business deal with Microsoft Corp. (MSFT), now that a leadership change at the Web portal is imminent. But how a partnership is structured and whether it would help the two companies effectively challenge industry leader Google Inc. (GOOG) remain unclear.

Combining the two companies' search businesses could produce cost savings of as much as $1.5 billion and give the two companies a bigger share of the roughly $10 billion U.S. Internet search market, likely allowing them each to increase revenues per click. A deal could also improve struggling Yahoo's financial results by generating higher cash flow. For Microsoft, a deal would advance one of its key objectives, increasing its Internet presence.

A search deal has been on hold since Microsoft's unsolicited $47.5 billion bid to buy Yahoo collapsed in May. But any deal would be fraught with potential pitfalls. Separating the search business from Yahoo may be easier in theory than practice and could weaken the company's strong display ad business, an area in which Google has been clamoring to expand. Meanwhile, the potential of a culture clash between Redmond, Wash.-based Microsoft and Silicon Valley icon Yahoo could slow or even hamper the progress of a merged search business.

After the collapse of the original takeover bid, Microsoft offered $1 billion in a second proposal to buy Yahoo's search business. As part of the transaction, the company would have also acquired a 16% stake in Yahoo's equity, which Microsoft said at the time would have valued the stock at $35 per share. That proposal was also rebuffed by Yahoo Chief Executive Jerry Yang.

Bad blood between Microsoft CEO Steve Ballmer and Yang, who earlier this week said he would step down when a successor was found, have made immediate discussions between the two companies all but impossible. And Yahoo has good reason to resist even a deal limited to search operations: The business is considered integral to its goal of developing a one-stop advertising platform on which marketers can place all types of ads. Microsoft also wants to build a unified search and display advertising platform, a goal that will be hard to achieve without Yahoo's search business.

Via CNNMoney