The advertising agreement between search giants Yahoo and Google has been officially terminated, after the Department of Justice said it would seek to block it, causing Google to withdraw its business proposal. The announcement was made yesterday, causing a lot of commotion among analysts on what Yahoo’s next step will be, now that its best business partner is out of the picture.

The deal between Google and Yahoo was announced back in June, soon after the talks between Microsoft and Yahoo failed to reach a conclusion. Yahoo expected at the time to get between $250 and $450 million in incremental operation cash flow out of the agreement.

Both Google and Yahoo dismissed claims that their partnership would disrupt competition, increase prices for advertisers, and give them complete control over the search advertising market. The companies argued that this is not a merger; on the contrary, it will help Yahoo consolidate its business and its position as a stronger competitor. Unfortunately for them, the Department of Justice did not agree.

Yahoo said in a statement following Google’s decision that they were disappointed with Google choosing the easy way to end the deal, instead of choosing to fight for it in court. Despite the potential benefits that Yahoo has now lost, the company expressed confidence that it will be able to continue its innovation and growth even without Google.

“The fundamental building blocks of a stronger yahoo in both sponsored and algorithmic search were put in place independent of the agreement,” Yahoo said, adding that the company continues to make progress against its Open Strategy and in the deployment of its game changing APT from Yahoo display advertising platform.

But despite that “optimism,” it looks like this hasn’t exactly been Yahoo’s year, as they’ve managed to lose two huge business opportunities, first with Microsoft, which they refused on several occasions, and now with Google.

After carefully analyzing the data in the Google-Yahoo advertising deal, the Department of Justice said it would block it, sending Yahoo in another period of desperation. The search giant now has to conduct the search of a lifetime for a suited business partner.

And since Google - the only viable alternative to Microsoft - is out of the picture, the question on everyone’s lips now is: will Yahoo take another shot at Microsoft? And if that would indeed be an alternative, is Microsoft willing to go back to negotiating? A deal between the two would be a major boost for Microsoft as it continues to struggle to catch up with Google on the search market, but also for Yahoo, a company CEO Jerry Yang said it is willing to sell “for the right price.”

On Wednesday night, Yang suggested they could start re-negotiating with Microsoft, and added one more thing that clearly shows lack of options at this moment, especially with investor Carl Icahn watching his every move: “to this day, I believe the best thing for Microsoft to do is to buy Yahoo.” However, he did not mention the financial matter, but he did say the deal, whichever that may be, would have to make sense.

Microsoft did not make any comments on Yang’s statements, as they are probably taking their time reanalyzing their position now. One thing they’ll probably keep in mind is that rival Google continues to have the advantage in this triangle.