Various reports are indicating that a deal between Microsoft and Yahoo is back in the works. But it’s not an acquisition. According to MarketWatch, “Rather than a full merger, the two companies are discussing ways to work together on selling both online search and display advertising…”

Does the phrase “rearranging the deck chairs on the Titanic” mean anything to these companies? All a reciprocal ad deal would do is help them both milk their current assets–not a bad thing, to be sure, but certainly nothing that could be labeled a strategic innovation. Both Microsoft and Yahoo are getting their clocks cleaned by Google, and now Facebook and Twitter are looking increasingly menacing in terms of their potential game-changing impact on the search market.

A marriage between the Redmond and Sunnyvale clans may or may not have worked, but it’s hard to see how simply dancing around each other is going to change anything. It may simply be a distraction to both companies, neither of which can afford to be anything but focused on innovation.