BoomTown was so glad we had this time together with Yahoo (YHOO) CEO Carol Bartz and Microsoft (MSFT) CEO Steve Ballmer, just to have a laugh or sing a song about a major Web search and advertising deal.

I liveblogged the conference call, which I updated as it happened.

Did Ballmer scream and jump up and down? Did Carol say something naughty?

Or as the companies said:

SUNNYVALE, Calif. & REDMOND, Wash., Jul 29, 2009 (BUSINESS WIRE)–Yahoo! Inc. and Microsoft will host a conference call for accredited media and financial and industry analysts at 8:30 a.m. ET/5:30 a.m. PT today, July 29, 2009, to discuss the search agreement the companies recently announced. In addition, b-roll footage will be available. The satellite feed of b-roll footage will contain broadcast footage of remarks from Yahoo! CEO Carol Bartz and Microsoft CEO Steve Ballmer, as well as corporate Yahoo! and Microsoft b-roll footage.

B-roll? More like, were Bartz and Ballmer on a roll?

To find out, read on!

5:28 am PDT: It was EARLY on the West Coast and we were being forced at first to listen to really sleepy music like you might hear in a dentist’s office.

Zzzzzzzzz…

5:34 am PDT: Memo Impresario Eric Brown was late! But, as soon as he gets on, the new Yahoo PR head began with an enthusiastic hello about the deal.

Bartz was up first, followed by Ballmer. They were clearly together in the same place, likely in Silicon Valley at some bunker.

“This is a great day for Yahoo,” she said. “It’s a game-changer and I am glad to finally be able to talk to you about it.”

Her patter was clearly scripted, but Bartz was pretty jaunty in her delivery.

And sassy enough to make the first of many dings to former Yahoo savior Google (GOOG)–not by name, but as either “the market leader” or “the competitor.”

Why not just go right to calling the search giant this deal is aimed at battling what Bartz really meant: The Borg.

Bartz stressed that this deal only covers search and the search ad business and not, say, display advertising.

And, she added, while Microsoft’s AdCenter technology will power the money-making, “search will continue to be an integral part of the Yahoo consumer experience.”

Boiling it down, Bartz said: “What this deal is really about for everyone is scale.”

Cue the next Google dig: “The combination of Microsoft and Yahoo search puts the choice back into the hands of consumers, increasingly concerned about the influence of a single player.”

Single player=Darth Vader.

5:40 am PDT: Ballmer was next. “I am so delighted to see [the deal] come to fruition,” he said.

He does not say much more except that he hoped it would “flourish and come to life over the many years.”

Ballmer sounded like someone speaking at a ribbon cutting of a copy store at the mall.

The livelier Bartz came back on, discussing the terms, hewing pretty much to what was already in the press release.

Microsoft’s AdCenter as technology. Integration. 10 years. No display deal. Separate user experience.

Now to the bucks, as Bartz noted, they add $500 million to Yahoo’s operating income, save $200 million in capital expenditures and improve annual operating cash flow by $275 million.

“At its full implementation,” she added. There is always a catch!

Bartz said Yahoo would use the money to invest in its other properties, although she was not specific.

Then, it was onto regulatory issues and getting this party started.

Bartz put on the brakes. “This deal will not happen overnight,” she said.

Actually, not even close. She predicted a closing in early 2010 and it being rolled out over the following three to six months.

Finally, Bartz thanked the tireless teams who did the deal. “With a lot of help from Steve and I,” she said and then quipped, “not always so.”

She and Ballmer were now sounding like a hip mom and dad.

5:45 am PDT: Question time!

The first one was about why the pair did not do a display deal and also how they were going to bridge the huge gap in how much each made per search compared to each other and Google.

Bartz said that the point was to keep the deal idiot-proof. “Frankly, we wanted it as straightforward and simple as possible,” she said.

Ballmer concurred: “We are taking a big bite here.”

As to the earnings gap in search, he said, “The deal in and of itself will let us close gap with the market leader.”

Ballmer tried not to say the word “Google,” but stumbled and did anyway.

The next question was about Bartz’s shift from her “boatloads of cash” quote–which she said, in an interview with me at the seventh D: All Things Digital conference in late May, was a must for a deal with Microsoft–to her new “boatloads of value.”

Simple, she said, trying to gloss it over–Yahoo did not need a big cash payment up front (and it did not get it either).

“As far as we are concerned, the boatload of cash is us preserving our revenue line,” said Bartz.

The next question was about what Microsoft gets out of this deal.

“We clearly see an upside as execution really builds,” said Ballmer.

After more money questions, there is finally one on regulator issues.

Back to Google-bashing from Ballmer.

“I suspect the competitor who may not like more competition is Google,” he said.

Microsoft General Counsel Brad Smith then jumped in and talked about working together and filings in D.C. and making the case.

He said he “looks forward to the debate,” which is just what a lawyer would say.

5:58 am PDT: Finally, the layoff question.

Bartz is clear here. Some Yahoo search employees will be dragooned over to Microsoft, some will move to other parts of Yahoo and some will be let go.

“Unfortunately, there are some redundancies,” said Bartz.

More financial questions, one on the mobile search market, one on innovation, one on scale and one on advertisers.

“Advertisers, especially smaller ones, want to make sure there is enough meaningful market for them and they don’t want to learn three platforms,” said Bartz. “They know how to enter into the Google system.”

She said “Google system” like she was talking about a gulag.

Meanwhile, Ballmer talked about how good it was to now be No. 2. Really, he did, since he was a distant No. 3 before this deal.

6:11 am PDT: Some technology question. Ballmer noted that the deal was not a “rip and replace” of Yahoo’s search for Microsoft. It will be an “integration.”

Next was a question about how this deal measured up to last year’s more money-laden offer by Microsoft.

Bartz said she didn’t just want an upfront payment, but a “true partnership,” with control over the Yahoo user interface and “real skin in the game.”

Ballmer called last year’s deal more investor-focused than operational. “The deal was different for Microsoft, not better,” he said, leaving out the cheaper part.

Finally, I get called on, and ask about who will lead the integration and how it will get done, so as not to create a huge distraction.

Bartz said it would be a “smooth transition…not that different from when Yahoo went from Overture to Panama.”

I did not have the heart to tell her that the transition of the Yahoo ad platform was anything but smooth and one of the reasons Yahoo got into the trouble it has gotten in.

Ballmer noted that the leadership that put together the deal is the leadership of the companies in the digital arena.

I also asked how the deal finally came together, especially after such historical rancor.

“It was like a snowball down a hill,” said Bartz.

But it was also a complex ball of ice, she added, noting “it was not a two-page term sheet.”

More like hundreds of pages. “There was not a high level of abstraction,” said Ballmer.

Finally, finding a kind of married groove–from that time before the random bickering sets in–Bartz noted that “dating is one thing, but having a partnership is another.”

She added: “The good news once we reached a point we believed to be advantageous, [we did a deal]…that’s how partnerships work.”

Well, exactly how it all works out, of course, still remains to be seen.

With a new administration coming into power, it makes a lot of sense for Microsoft to launch its new “Microsoft on the Issues” blog this week.

Covering legal and policy issues, the opening post by Microsoft (MSFT) General Counsel Brad Smith noted:

Today we are launching ‘Microsoft on the Issues’ to open another, more direct line of communication that will enable us to quickly and succinctly provide our perspective on the pressing technology matters of the day. We do not want this to be a one-way conversation. We want to create a transparent dialogue with readers and stakeholders. We want to enhance our participation in discussions that propel policy-making at local, national and international levels.”

But, so far, with only two posts and few comments, it’s a tad dry–and, by that, I actually mean dull–and in desperate need of some spicy sauce to jazz up the joint.

Here are some modest BoomTown suggestions:

Never seen before behind-the-scenes photos of Microsoft honcho Bill Gates cracking wise with the legal team during the software giant’s antitrust trial in the late 1990s!

CEO Steve Ballmer’s personal ruminations in a “BOMB-er” blog on the dangers of Google (GOOG) dominance over search–the uncensored version!

A legal argument about how Yahoo (YHOO) CEO Jerry Yang should be declared incompetent for not taking Microsoft’s very, very, very generous offer. (Title: “Is It Something We Said?”)

Microsoft’s collection of the outtakes from the Jerry Seinfeld commercials, with a very special essay about the Constitutional right to be extremely weird.

No?

I guess, as Smith wrote, it will be a “wide range of issues, from broadband access, online privacy and data portability to intellectual property protection, competition law, international trade and immigration.”

Also, he promises to write about the “next wave in the computing revolution and its potential to use the power of software and the Internet in new ways to enhance choice for consumers, businesses and governments.”

Thus, the first post–on workforce development and skills training by Global Corporate Affairs VP Pamela Passman.

In any case, I am still waiting for that Ballmer blog.

Yesterday, BoomTown went to Washington, D.C. to see lawyers from Microsoft (MSFT), Yahoo and Google face off in Senate hearings about the controversial search advertising outsourcing deal recently struck between Yahoo (YHOO) and Google (GOOG).

Titled “The Google-Yahoo Agreement and the Future of Internet Advertising,” the hearings were called by the Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights and chaired by Sen. Herb Kohl (D., Wis.).

As I expected, the hearings on the Yahoo agreement with Google (transcripts of testimonies here) to outsource some of its ad search business were a lot of show and not so much content.

There was also a hearing for the House’s Task Force on Competition Policy and Antitrust Laws, called “Competition on the Internet,” which featured the same trio of execs.

And here’s a video of BoomTown chatting up Google’s Chief Legal Officer David Drummond, Microsoft’s General Counsel Brad Smith and Michael Callahan, general counsel for Yahoo, right after the Senate hearings were over.

Please see this disclosure related to me and Google.

Sitting at the Senate hearings about the Yahoo-Google ad search deal this morning in Washington, D.C., let it be said that BoomTown is deeply dubious about whether it is a good thing for consumers and advertisers, as both Internet companies have asserted.

But this was my most certain conclusion:

The worst-case scenario is actually for politicians to meddle in the Internet space with their largely Web-ignorant mitts.

But that’s just me!

Titled “The Google-Yahoo Agreement and the Future of Internet Advertising,” the hearings were called by the Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, chaired by Sen. Herb Kohl (D., Wis.).

In any case and as usual, the hearings on the Yahoo agreement with Google (transcripts of testimonies here) to outsource some of its ad search business were a lot of show and not so much content.

There was an interesting little testy back-and-forth between Sen. Arlen Specter (R., Pa.) over remarks that Yahoo (YHOO) CEO Jerry Yang might have made in a previous meeting with Microsoft (MSFT) that was recounted by Microsoft General Counsel Brad Smith.

The gist of it was that Yang sketched out a world of two “poles”–Google (GOOG) on one side and Microsoft and Yahoo on the other. And if Yahoo moved over to the Google side, the World Wide Web would be terribly askew!

Yahoo General Counsel Michael Callahan said that was not his recollection of the meeting, in which he also participated.

Specter wondered who was telling the truth, which only made me want to yell out: Welcome to the MicroHoo Hall of Crazy Mirrors, Senator!

Mostly, Google and Yahoo argued that by doing an ad-search partnership they would stay aggressively competitive with each other.

Microsoft, of course, argued that the end was nigh.

“Never before in the history of advertising has one company been in the position to control prices on up to 90 percent of advertising in a single medium,” said Microsoft’s Smith. “Not in television, not in radio, not in publishing. It should not happen on the Internet.”

Countered Yahoo’s Callahan: “The purpose of this commercial arrangement, the intent of Yahoo moving forward, is to make our company an even stronger competitor to Google, to Microsoft and to others in the dynamic and rapidly growing online advertising world.”

Of course, Google chimed in, via Google Chief Legal Officer David Drummond: “Google and Yahoo will remain vigorous competitors, and that competition will help fuel innovation that is good for users and the economy.”

Yes, concentration of power is always good for the world! I mean, Microsoft’s Windows monopoly turned out so well for the industry for so long!

Wait, that’s not a very political thing to say. (Then again, I completely forgot just how stuffy D.C. was and wore Silicon Valley garb–jeans and a T-shirt–to the hearing.)

In any case, the sideshow to the MicroHoo drama moves to the House side of Capitol Hill this afternoon.

There the Task Force on Competition Policy and Antitrust Laws held the less dramatically named hearing “Competition on the Internet.”

It was the same trio of Yahoo, Microsoft and Google lawyers, of course, and more of the same.

Which is to say–a lot of hot air, little movement, but much more evidence of the next phase of the Internet and the two true poles: The Web World War of Microsoft versus Google.

In any case and speaking of hot air, here’s my video interview with the lawyers from Google, Yahoo and Microsoft, which is also posted here:

Today, BoomTown boards the Acela Express from New York’s Penn Station to D.C.’s Union Station to attend the Senate hearing on the Yahoo agreement with Google to outsource some of its ad search business.

Titled rather ominously, “The Google-Yahoo Agreement and the Future of Internet Advertising,” the Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights (eek!) will hear testimony at 10:30 a.m. at the Dirksen Senate Office Building from a passel of Internet reps, including those from Yahoo, Microsoft and Google.

It is chaired by Sen. Herbert Kohl (D., Wis.).

Will there be a lovely video of event? Indeed, there will be!

Added plus: I went to college and even worked on Capitol Hill, all before toiling at the Washington Post (Hey, Marcus!) for a dog’s age, so I know my way around the place.

And, as BoomTown readers might recall, I am not for the deal, mostly because it gives Google even more market power, even though the partnership is limited.

As I wrote:

As someone who has been a longtime critic of Microsoft’s (MSFT) historically thuggish tendencies, BoomTown finds it a little hard to believe that Yahoo and Google think that they can get away with any kind of significant search-ad outsourcing deal that would move the needle at Yahoo … .

And while it might be a long-cherished dream of Google’s to take over Yahoo search–and also get the chance to return to the scene of the crime, since Google got its first big push from doing Yahoo search, before Yahoo (YHOO) wised up too late–there is simply no way this will be allowed by regulators. Nor should it.

Still, you have to almost admire the chutzpah of the search giant in making this move, if the sheer and unadulterated arrogance of it wasn’t so distracting.

Because, while Google (GOOG) has almost none of the obvious menacing aggression that characterized Microsoft when it thoroughly dominated tech (although all those beach bikes on its campus inexplicably creep me out a little bit), the company still cannot be allowed to have a monopolistic share of the market.

It is bad for advertisers, it is bad for consumers, it is bad for innovation, no matter how well-intentioned Google is.”

So, you might imagine, I am looking forward to biting into this tasty piece of political theater!

Here is the list of speakers:

David Drummond
Senior Vice President
Corporate Development and Chief Legal Officer
Google
Mountain View, Calif.

Michael Callahan
General Counsel
Yahoo!
Sunnyvale, Calif.

Brad Smith
Senior Vice President and General Counsel
Microsoft
Redmond, Wash.

Matthew Crowley
Chief Marketing Officer
Yellowpages.com
Glendale, Calif.

Tim Carter
President and CEO
Askthebuilder.com
Cincinnati, Ohio

Please see this disclosure related to me and Google.