If the telecom and Web worlds are merging, then a mega-merger on one side — Microsoft’s proposed $44.6 billion acquisition of Yahoo — surely affects the other.

But how?

1. The Ad Angle

The combination of Microsoft and Yahoo is, above all, about online advertising. Google is the paid search leader (with more than 75 percent market share in 2007, according to eMarketer), with Yahoo and Microsoft chasing from behind. This week, Google reported fourth quarter revenue of $4.83 billion, mostly on ad revenues, up 51 percent from a year ago. Too bad its stock is taking a hit, down from a high of 750 to a shade north of 500 in a few months. The cause: part law of big numbers, part recession worries, part challenges in selling off its ad inventory, particularly social ad inventory (including a deal with MySpace), which nonetheless remains a priority for both Google *and* Microsoft (which is partnered with Facebook). Even as Web/search/social network advertising shakes out, the next big market — mobile ads — is beginning to emerge as well, with all the same players targeting the riches and just as much uncertainty.

The telco take here is obvious: service providers need to figure out how to add advertising their revenue mix, but mastering this volatile market is not going to be easy. For more on the carrier advertising challenge, read our cover package from our current issue, which includes a big-picture overview of the telco ad opportunity plus examinations of IPTV advertising and mobile ad developments.

2. Portal Partnerships

Google, Microsoft and especially Yahoo have been key content and ad partners for carrier broadband and mobile portals. So combinations and shake-ups in the Web search/portal market absolutely affect those deals.

It’s probably no coincidence then, given Yahoo’s sliding share price, that days before the unsolicited Microsoft offer Yahoo announced a renegotiated portal deal with AT&T. The deal essentially removes broadband “bounty” fees paid to Yahoo by AT&T, replacing those with an ad revenue-sharing arrangement on AT&T Web and mobile sites. The deal means less guaranteed money for Yahoo but could result in greater revenue for the company if Web and in particular mobile advertising takes off on AT&T properties. AT&T will relaunch the att.net portal soon, powered by My Yahoo content and the Yahoo Mail platform, the companies said. Yahoo recently renegotiated a portal deal with Rogers Communications with similar terms.

The AT&T/Yahoo deal demonstrates a shift in the Web/telco power positions, with service providers now in a position able to cut better deals with their portal partners. Yahoo — which has stated a goal of becoming the “start” page for as many users as it can — clearly remains interested in service provider partnerships. Google, on the other hand, is being viewed more warily by carriers due to its wide-ranging mobile device and wireless services ambitions.

3. Partner/Competitor Matrix

While Google’s moves are beginning to position it as both a potential partner and competitor, Microsoft may be even more so in that position. Microsoft today provides a variety of software and services to fuel service providers’ core businesses, from plain old server software to IPTV middleware and set-top software and more. At the same time, Microsoft’s telecom ambitions, particularly in the area of unified communications and software-as-a-service, place it potentially in competition with the service provider market. “Coopetition” isn’t a new concept in the telecom world, but for service providers a potential Microsoft/Yahoo deal adds yet another dimension of complexity to the partner/competitor matrix.

4. Web-Telephony Route-Arounds

Yahoo has been fairly silent on the Web-telephony/unified communications front. Microsoft, on the other hand, has broad ambitions there with the release late last year of Office Communications Server and its unified communications strategies. And Google is clearly eying the telephony market as well with its spectrum bids, Grand Central acquisition, VoIP-enabled Google Talk software. While no Web-based telephony company or startup has taken a leadership position yet that would cast fear into the hearts of service providers, a strong move by a larger player like Microsoft/Yahoo or Google will likely have a much bigger impact. It’s an area carriers must continue to watch closely.

5. A Grand Duopoly

We’ll take a bit of a U.S.-centric view here, but clearly a Microsoft/Yahoo combination will compete with Google as the two big dogs in the online/mobile search and advertising markets. Will the major U.S service providers, notably AT&T and Verizon, pair up and partner along those lines as well? So far, AT&T seems to be playing both sides of the fence, dealing with Yahoo on portal content and ads and working closely with Apple on the iPhone (noteworthy because Apple and Google seem linked on a number of fronts including Google CEO Eric Schmidt serving on Apple’s board). On the social network front, Microsoft has aligned with Facebook while Google is linked with MySpace. Will we seem the same sort of choosing up sides on the Web/telco side? One would think so.

What Do You Think? Let us know what you think in the comments section below. What will the Microsoft/Yahoo potential combination mean for the carrier market and the intersection of Web and telephony?