Well, well, well, it looks like Google did not drop the Yahoo deal over lack of interest. It appears they dropped it due to a pending AnitTrust suit from the US DOJ.
CNET has a nice little piece on this explaining that the DOJ was a mear three hours from filing the suit when Google phoned and explained they were dropping it.
Read more here
"Sandy Litvack, the lawyer hired by the Justice Department to look into the search advertising pact between Google and Yahoo, said in an interview with American Lawyer's AmLaw Daily that the government had a suit ready and was just three hours away from filing it.
"We were going to file the complaint at a certain time during the day," Litvack said in the interview. "We told them we were going to file the complaint at that time of day. Three hours before, they told us they were abandoning the agreement."
According to Litvack, the government would have sought an injunction to stop Google from serving up search ads for Yahoo, alleging that Google was violating two sections of the Sherman antitrust act.