Microsoft and Yahoo, two companies whose failed merger generated quite a bit of press last year, are now discussing potential search and advertising partnerships that could boost both companies as they compete against Google for market share.

Both companies have refused to comment on the matter, but one purported deal has the two swapping online advertising assets. That deal would play to both companies' strengths, with Yahoo taking over Microsoft's display and premium advertising, and Microsoft handling the search advertising for both companies, according to All Things Digital.

Google currently has a 63 percent share of all U.S. search traffic, with Yahoo in second place at 20.6 percent, and Microsoft a distant third at 8 percent. By combining forces for display and search, Yahoo and Microsoft would be much more attractive to advertisers.

Yahoo could reportedly earn as much as $450 million in profit by combining its search business with Microsoft's, according to Bloomberg. The deal would prove immensely beneficial to Yahoo, which is expected to lose three percentage points of its search share over the next year as several distribution deals end.