According to the Associated Press report, an unnamed source 'in the know' of the proceedings pertaining to the imminent Microsoft-Yahoo alliance has informed that the partnership between the two Internet biggies has been finalized and will likely be announced on Wednesday.

The Internet search deal between the Redmond, Washington-based Microsoft and the Sunnyvale, California-based Yahoo is essentially aimed at thinning the online advertising market of the Internet search leader Google Inc. The news and some details of the anticipated Microsoft-Yahoo agreement were first reported by the AllThingsDigital blog and Advertising Age.

As per the source - who spoke on the condition of anonymity since an official announcement about the deal is yet to be made -, the revenue-sharing terms of the deal entail that the companies will divide the revenue generated from the search ads on their Web sites. As such, Microsoft will not be paying an upfront fee to Yahoo.

Though the Microsoft-Yahoo alliance will give undoubtedly give Microsoft's Bing search engine a significant boost for competing with the Google search engine, analysts opine that the deal might be blocked by antitrust regulators.

Saying that the deal may also face privacy issues, said Colin Gillis, an analyst at Brigantine Advisors, said: "Any agreement where Microsoft powers search and shares the search data to Yahoo is open to scrutiny from US and EU justice departments."