Yahoo! is reportedly getting closer to that controversial deal that would outsource its search advertising to Google.

Sources told the Wall Street Journal that the limited test of Google that Yahoo! set up went well.

The Google strategy, which could potentially be worth a billion dollars a year to Yahoo! but is sure to catch antitrust flak, is part of a tripartite deal that would have Yahoo! merge with AOL and AOL’s owner Time Warner take a 20% stake in the combined company for some cash to fend off Yahoo!’s unwanted acquisition by Microsoft.

Then the idea would be for Yahoo! to use Time Warner’s money to buy back a few billion dollars worth of stock for somewhere between $30 and $40 a share to pacify investors watching Microsoft and its money walk out the door, which could crush Yahoo’s stock.

Anyway, the Journal now says Google and Yahoo! are trying to figure out how to avoid being blocked by regulators and could limit their ties to specific kinds of search queries or regions.

Microsoft, meanwhile, has other ideas and has hired a Washington lobbyist, Bryan Cave Strategies, to ensure that its acquisition of Yahoo! passes the regulatory gauntlet.

Google has also hired lobbyists to try to fend off the deal, according to the AP.

The Journal allowed that Yahoo’s machinations are unlikely to derail Microsoft’s plans.

Yahoo! wants more than the $31 a share on offer but reportedly won’t name its price, but won’t negotiate with Microsoft until Microsoft raises its bid, the paper said.

Much may depend on Yahoo!’s first-quarter results, which are due Tuesday, April 22.

Poor and they play to Microsoft’s hand, strong and they don’t.

The other key date is the April 26 deadline that Microsoft gave Yahoo! two weeks ago to submit or be taken forcibly at a lower price than offered – a threat Yahoo! called “counterproductive.”