Recently, BoomTown reported that talks between Microsoft and Yahoo had gotten “hot and heavy.”

That mood seems to be continuing, as many sources close to the situation on both sides said that the pair are coming ever closer to a search and advertising partnership deal.

“It’s meaningful,” said one source. “The fact that there is even progress and engagement, after so many failed attempts between us, says a lot.”

Indeed, there seems to be a lot of engagement between the two sides of late, and some sources think a deal could even be struck within the next few weeks.

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Along with Yahoo CEO Carol Bartz’s external email earlier today, the company also outlined the new management structure in another memo.

It’s pretty much what BoomTown has been reporting all week. Top-down simplification, which is another word for: Carol rules over Yahoo.

CTO Ari Balogh gets a lot of stuff as new head of products, and so does U.S. head Hilary Schneider, including mobile, as EVP of North American Region. Bot report to Bartz.

Here’s the entire memo of Yahoo’s new organization.

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On Friday, BoomTown first reported that new Yahoo CEO Carol Bartz is likely to be announcing a sweeping new management structure soon, which can only mean the possibility that some existing top execs are likely to be broomed out, even as some new ones are ushered in.

“This is going to be a full-scale peanut butter recall,” joked one exec, referring to the infamous “Peanut Butter Manifesto,” which was sent around the company several years ago by former exec Brad Garlinghouse. It laid bare the problems at Yahoo, most especially a decided lack of decision-making and lugubrious levels of managers.

Here is the sticky skinny.

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

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.

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Sitting at the Senate hearings about the Yahoo-Google ad search deal this morning in Washington, D.C., let it first be said that BoomTown is deeply dubious of whether that 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!

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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.

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