Wrote The Deal’s Cecile Kohrs: “A proposed joint venture between rival Internet companies Google Inc. and Yahoo! Inc. appears headed for the trash bin, just ahead of an expected U.S. Department of Justice challenge to the agreement, lawyers close to the deal said.”

Well, maybe it will die at some point. But, in the words of Juba in the last line of the greatest movie ever (“Gladiator,” of course!): Not yet.

Said Google spokesman Adam Kovacevich: “We are continuing to have cooperative discussions with the Department of Justice about this arrangement and agreed to a brief delay in implementing the agreement while those discussions continue. We are confident that the arrangement is beneficial to competition, but we are not going to discuss the details of the process.”

It was a sentiment underscored by Google CEO Eric Schmidt, who was doing an economic summit with Democratic Presidential candidate Sen. Barack Obama today in Florida and told reporters there when asked about the deal: “We agreed to extend our discussions … with the DOJ.”

Yahoo’s CEO Jerry Yang also said the same during Yahoo’s third-quarter earnings call this afternoon.

In fact, that Google (GOOG) and Yahoo (YHOO) lawyers, along with the Justice Department, are still talking is the strongest indication that there might be some middle ground to be found in the fight over the future of the search advertising business.

After all, Google is not shy about going to court. Among many others, it took on media giant Viacom over YouTube’s copyright issues with all the relish of a lipstick-wearing pit bull.

In fact, I am convinced that the search giant’s corporate mantra is from Travis Bickle in “Taxi Driver”: You talkin’ to me? You talkin’ to me? You talkin’ to me? Then who the hell else are you talking … you talking to me? Well, I’m the only one here.

And Yahoo? Well, Yahoo can never stop talking, as evidenced recently by its never-ending discussions to merge with the Time Warner (TWX) online unit, AOL.

This is an overall corporate characteristic–Yahoo often has the tone of a 1970s encounter group.

Plus, the deal to put some Google search ads on its site is an important fountain of revenue Yahoo desperately needs. For its part, Google wants the deal, mostly to keep Microsoft (MSFT) at bay.

As for the Justice Department, it has one big problem if it does go hot and files a lawsuit against the Yahoogle twins: A little thing I like to call “proof.”

Now I am no legal eagle, but I am told by experts that it is a little hard to prove damage that has not occurred yet if it is seeking an injunction to stop implementation of the partnership.

It’s like the big question in that dumb but watchable Tom Cruise movie, “Minority Report”: Can you arrest someone for a murder they might commit?

Google, with its dominant market share that grows daily, may very well be the scariest company on the planet.

(I think it might indeed be and have written in opposition many times to this partnership of the No. 1 and No. 2 players in the search space, but who am I to say?)

But making a case that it will turn Yahoo into a satellite, raise ad prices and turn into Godzilla, all before it actually happens, is tough.

More to the point, with all the pressure from public interest groups and advertisers who oppose the deal without some checks and balances, along with Microsoft’s relentless lobbying, some accommodation obviously must be made.

Thus, that is going to take more days of jabbering, probably into next week (although it all does have to be settled before the election, when the regulators pressing the case might be out of a job).

After those blabby avenues are exhausted, of course, we might very well see the digital gladiators go at it. Or abandon the field.

But not yet.

Please see this disclosure related to me and Google.

While many would like to see Microsoft reignite its bid for Yahoo, and as much as even good reporters insinuated that its CEO Steve Ballmer (pictured here) said yesterday in an appearance that he was interested in reopening merger talks, the company will not and he is not.

While some are surmising that Ballmer is playing a little game of cat-and-mouse with Yahoo CEO Jerry Yang, I would say what happened yesterday was more a woeful misconstruing of what was said, combined with Ballmer’s tendency to be less than careful with his words.

Kind of like executive Tourette Syndrome.

Here is what is true, based on talking to numerous sources:

1) As was reported here a week ago, Microsoft (MSFT) has never stopped being interested in doing a search deal with Yahoo (YHOO). In fact, it is hoping Yahoo will consummate its deal with AOL.

Microsoft hopes its can then step in and grab the search business from Google, which has a search deal with AOL and is trying to complete a deal with Yahoo too.

Microsoft execs, sources said, think regulators will determine that the combined Yahoo and AOL will be too large a partner for Google (GOOG), due to its dominance over the market.

As you will see from the verbatim transcript below, a search deal, and not a larger one, was what Ballmer was referring to, when he said a deal made “sense economically.”

Just to underline that, a Microsoft spokesman said this, after Ballmer’s comments were reported as a larger interest in all of Yahoo: “Our position hasn’t changed. Microsoft has no interest in acquiring Yahoo. There are no discussions between the companies.”

Believe it.

2.) And believe this: AOL and Yahoo are still in serious talks, which have accelerated over the last week. Execs from many levels of Yahoo are now in the process of meeting to determine how to integrate the companies.

This is the deal that is most likely to come first, if the pair can quicken the pace and be less foot-draggy.

Price remains a big issue, of course, especially as the Wall Street meltdown has hit the stocks of both Yahoo and AOL owner, Time Warner (TWX).

Given the deeply worrying economic indicators that are more likely to hit the advertising businesses of AOL and Yahoo harder than most, both should realize they have zero time to act as if they have all the time in the world.

3.) If they do not act, Yahoo is in a very dicey situation. Reporting its third-quarter results next week, which will likely not to be as bad as expected, the potential for disaster is actually in the upcoming fourth quarter.

Yahoo’s low stock price leaves it vulnerable to a range of other buyers, especially private equity funds, which might buy it and cut it up, selling off the various parts.

This is not a good thing.

One thing that Ballmer said was correct; it makes much better sense for Yahoo and Microsoft to find some common ground and find a way to partner.

Frankly, another go at a merger should even be on the table–and that should be obvious to Ballmer.

Finally, here is the verbatim transcript of Ballmer at the Gartner ITXpo in Florida yesterday:

NEIL MCDONALD: So advertising and all that business model change that certainly has to be the driving force for why you were very interested in acquiring a company called Yahoo, whose stock we noticed has continued to drop. So we have to ask you if the acquisition made sense eight months ago, why wouldn’t it make even more sense now, now that the price would presumably be a lot lower?

STEVE BALLMER: Well, I don’t know if the price would be lower. We offered $33 not too long ago, and it’s $11-1/2 today, and so I don’t know what price might have really gotten the job done. It’s clear that Yahoo did not want to sell the company. It didn’t want to sell when we offered $33. You’ve got to believe they don’t want to–if they thought the company was worth more than $33 six months ago, they probably still think it’s worth at least $33 today. And so I think what we learned through that is, look, they want to remain independent. Perhaps there will continue to be opportunities to partner around search. We’re not in any discussions with them, but that was an offer we made after the acquisition had fallen through. We’ll see. I still think it would make sense economically for their shareholders and ours.

All Yahoo needs now is for former Florida Secretary of State Katherine Harris to show up and start recounting votes.

It could happen, given all the crazy characters who have been drawn to the much-beleaguered Internet company like a magnet, in 2008.

It’s almost as if there is a voodoo curse on Yahoo (YHOO).

So, you didn’t think the digital gods would let it have more than one weekend of good news, did you?

No, they will not, it seems.

After the annual meeting last Friday, which went off without a hitch and, more importantly, without an expected major shareholder vote against the company’s management and board, you could feel a palpable easing of tension among Yahoo leadership and its exhausted PR team.

By Monday, the Yahoo shareholder kerfuffle–in essence, one major shareholder of Yahoo has asked for its outside tabulator of investor votes at the annual meeting for a recount–had landed with a thud.

The problem is how shares were tallied in the Yahoo annual meeting, specifically around whether a group of votes withheld by Capital Research Global Investors was not counted, counted incorrectly or even voted incorrectly by the investor.

Parent company Capital Research & Management confirmed that it had asked Broadridge Financial Solutions, a Lake Success, N.Y.-based financial services company that does securities clearing and processing, to investigate whether those votes were correctly counted on behalf of its Capital Research Global Investors fund.

Capital Research Global Investors–one of two funds separately managed at Capital Research & Management–owns 6.5 percent of Yahoo, according to recent filings, and Capital World Investors owns 9.8 percent.

Capital Research Global Investors is run by legendary media investor Gordon Crawford (pictured here), who has become disenchanted with Yahoo over the last year.

Because of that, sources close to the fund’s thinking said Crawford had recommended that the fund withhold votes from CEO Jerry Yang and some other board members.

It’s not clear whether that actually happened or, if it did, whether the votes were tallied properly.

That’s because Yang, for example, only had 14.6 percent withheld, with 85.4 percent voting for him.

The votes withheld seemed low to Capital, considering Crawford’s large stake and how many shareholders have been deeply unhappy with Yahoo management this year.

Instead, overall results for Yang and the Yahoo board were mostly better than last year.

Everyone is investigating, of course–from Capital Research to Broadridge to Yahoo, which does not do its own tabulation, although it has hired an outside proxy solicitor to manage the process–to try to find out what’s what.

It is likely there’s a nonsinister reason for the voting results.

And there might be a lot of possible explanations, but I am partial to blaming the confusion that followed after activist investor Carl Icahn pulled his proxy fight a week before the meeting and made nice with Yahoo.

Unfortunately, Icahn’s golden proxy ballot was already in the hands of investors, many of whom might have voted for it and then had that vote essentially voided.

Wrote one BoomTown reader and Yahoo shareholder:

“I hold 23,000 shares of YHOO. I had 17,000 on the date of record. I voted to ‘withhold all’ … I think twice. Then I voted for all of Carl’s team. Now I have learned that the Carl votes did not count and a day AFTER the annual meeting I received my new ballot. I wonder how many other people were disenfranchised??? Who can I complain to?? Is this how Jerry got his support??”

Another commenter on the site also wrote:

“As a stockholder, I was curious *which* of my proxy letters actually was counted–I received four. One was from Icahn, the other three were from Yahoo. The last of which arrived today, August 4th. Does this strike anyone as odd?”

Actually, Yahoo’s twisting journey passed odd a long time ago and is now headed toward “The X-Files” territory.

(So let’s all triple-hope Yang’s upcoming trip to China for the Olympics goes smoothly. Have a good time, Jerry, we’ll be back here counting!)

Of course, a lot of the attention last week was aimed at MySpace, which had only a very peripheral role in the appalling story of a gang of teen harpies from Florida who viciously laid into another and videotaped it.

The unfortunate girl–whom the female wolf pack (to be fair, wolves are a lot more intelligent) was heard accusing incoherently in the video–had apparently posted something on MySpace–owned by News Corp. (NWS), which owns this site–that apparently ignited their rage. Thus, the genius leader of the half-dozen girls planned on posting a video of the beat-down to MySpace and also YouTube (GOOG).

The parents of the beaten girl, who was severely injured in the incident, urged the sites to prevent users from uploading the viral video, even though it was never uploaded by the teens and has been regularly taken off the services when it has been.

(I could not find the video on either service last night, except in snippets as part of news coverage. It is available on Salon here, and can also be embedded, which I decided not to do here.)

Still, the injured girl’s father was quoted in a local newspaper: “As far as I am concerned, MySpace is the anti-Christ for children.”

Actually, the gang of girls get that particular moniker in my estimation. In any case, justice will be meted out, I am sure, and it started with the judge’s order that the defendants not use any social network.

And while it got a lot less attention, don’t miss New York magazine’s riveting story of a Facebook scandal at New York’s tony Horace Mann private school.

In the piece, titled “Testing Horace Mann” by Gabriel Sherman, Facebook is used as a vehicle for disgruntled kids to create obnoxious groups attacking teachers they don’t like in verbally appalling ways and without any apparent recriminations.

Laid out in exquisite detail are how petty school politics, overindulged kids and parents who need their heads examined collided to create the digital equivalent of “Lord of the Flies.”

Here’s the money quote:

These Facebook pages, however, were something different. Kids have always ragged on an unpopular teacher or ridiculed an unfortunate classmate. But sites like Facebook and RateMyTeachers.com are changing the power dynamics of the community in an unpredictable way. It is as if students were standing outside the classroom window, taunting the teacher to her face. Should they be punished? There were, as yet, no rules or codes for how a school should address such issues.”

While it is pretty obvious that it is easy to blame the technology in both these cases, there are bigger societal issues at stake here that nothing MySpace or Facebook can fix with a simple tweak.