Does the Google-Yahoo Deal Mean the End of Panama?

(MoneyWatch)  Google and Yahoo struck a deal yesterday, in which Yahoo will use Google's AdSense program in some broad and far-reaching ways. BNET Industries tech blogger Larry Dignan did a nice rundown of the key parts of the deal:

• The Yahoo-Google partnership is non-exclusive and Yahoo controls the user experience and where the ads run.
• Yahoo will still use its own Panama marketplace when the monetization is comparable to what Google could provide.
• Google and Yahoo will make their instant messaging services interoperable.
• The agreement has a term of up to ten years: a four-year initial term and two, three-year renewals at Yahoo!'s option.
• Either party can terminate the deal in the event of a change in control. The catch: Yahoo has to pay a termination fee if the agreement is terminated as a result of a change in control that occurs within 24 months. The termination fee is $250 million, subject to reduction by 50 percent of revenues earned by Google under the agreement. That's basically an anti-Microsoft takeover clause.
• And most importantly, Google will provide $250 million to $450 million in incremental cash flow. After 12 months of implementation, Yahoo expects "an $800 million annual revenue opportunity."

For me, the key section has to be Yahoo's plan to continue to use its Panama marketplace where "monetization is comparable to what Google could provide." Our pal The Founder over at Tribble Ad Agency says he's hearing this is essentially the end of Panama, period:

The story we have been hearing from the insiders is that you will be able to purchase ads on Google Adwords to run on Yahoo-- meaning there would be zero reason to even use any of Yahoo's login screens to purchase advertising-- one account at Google will handle it all, and other than a front end Adwords API driven interface, Panama will be no more, several years of development went into the Panama program that will now be nothing more than a login screen to Adwords.

This would be a severe blow to Yahoo, to put it mildly, especially since I've heard the company sank at least $1 billion into developing Panama. However, I've also heard from an insider at Yahoo who says things are a bit different. According to the source, the party line is that Panama will still compete with Google's ad platform whichever can make Yahoo more money will get the spot. But even those within Yahoo are leery about the deal, worrying that in the real world, this deal could significantly reduce the amount of traffic Yahoo's advertisers receive through Yahoo Search Media.