The Microsoft-Yahoo search deal isn’t a forgone conclusion. In fact, news out yesterday suggests the companies may face serious regulatory hurdles. Potentially, it won’t be allowed. That leaves me wondering. What’s Yahoo’s Plan B? Does it even have a backup plan, especially when CEO Carol Bartz has suggested Yahoo can no longer run search on its own?

In June — before the deal was announced — Bartz said this to the world:

“Yahoo doesn’t have to do anything with Microsoft about anything,” Bartz said at an investor conference.

Three months later, she reversed herself. A New York Times interview has her saying Yahoo couldn’t afford to do search on its own:

Ms. Bartz said she sold the search business because Yahoo could no longer continue to match the level of investment Google and Microsoft were making in searching, one of the Web’s most lucrative and technologically complex businesses.

Who does this? It’s like trying to sell a bricks-and-mortar business and saying you’ve got no choice but to do so. You’re not going to get a good price from your buyer (Microsoft), if they think you’re desperate or have no alternative (Yahoo’s already been barred from doing a deal with Google).

Worse, what if you DON’T sell that business? Are you just going to board it up? Are you going to shop it around to other buyers who realize you’re even more desperate now? Do they want to buy a business that you’ve said can’t afford to run?

That’s the situation Bartz is in if Yahoo can’t sell its search assets. Meanwhile, Yahoo employees keep leaving. Doug Cutting who left last month said his departure had been in the works for months and had nothing to do with the recent deal that was announced.

I totally believe that. I figure months before this, Cutting was smart enough to see Yahoo was done in search and wanted to move on. I suspect more people will be like that, and when Bartz has continued to suggest that Yahoo isn’t a search engine — even denies it ever was one — it just doesn’t seem that inspiring for anyone who wants to be involved with search.

Oh, but the user interface will be key! Bartz pushed that once again in a television interview out yesterday, likening search technology to being like an Intel computer processor that you build a computer around. IE — see how successful companies like Microsoft, Apple or HP have been without owning the processor? Yahoo can be the same without owning the “search processor.”

The UI isn’t going to change anything for Yahoo. In case there’s any mistake, I’ll say it again as clearly as possible:

USER INTERFACE CHANGES WON’T LET YAHOO COMPETE IN SEARCH

Got it? Write it down, someone come check back on this in five years. If Yahoo’s moved up in search share thanks to outsourcing search and just toying with the user interface, I’ll eat those words somehow — covered even in Yahoo purple frosting.

No one has succeeded as a general search engine just by making user interface changes. No one, in the past nearly 15 years of us having search engines. That’s like 150 “real” years. (For more, see A Search Eulogy For Yahoo and Why Search Sucks & You Won’t Fix It The Way You Think)

The interview ticked me off in other ways. Bartz downplayed search as something people spend only 3% of their time on. Hey, I don’t spend all my time shopping. But who do you think makes more money off of me, places I shop at or television stations that deliver me entertainment?

Bartz also joked about how “I don’t wake up in the morning and think gosh, ‘What am I going to search for’.” This was in reaction to one of the CNBC hosts interviewing her joking how Google’s big change to its home page was to make the search box larger. Yahoo, you see, is that central place where everyone starts their day.

Ha, ha, ha. Let’s laugh all the way to the bank, shall we? That “plain” home page earns plenty of money for Google from all the people who go there and, um, search on it. Making the Google search box bigger was a simple but effective change. Gosh, I’m pretty sure one of the Yahoo home page changes (it’s hard to keep track of them, as that page seems to change so often), was to make its own search box bigger. Let’s also put our heads in the sand about the fact that Google has a personalized home page service, iGoogle.

Bartz does an amazing job talking about all of Yahoo’s properties and downplaying Google as if it doesn’t compete in some of these same areas. I agree. Yahoo is a huge leader in many areas, as I wrote in my Yahoo The Failure: Myth Versus Reality piece last year. But Google does compete in a variety of ways. It’s investing in search AND in portal features. So’s Microsoft. It’s Yahoo that’s pulling back.

Watching that interview, I remarked on Twitter that Bartz is coming off with me like some type of Sarah Palin of search (Silicon Valley Insider got a kick out of that). I watch her do these TV interviews, and she’s got this “aw shucks” and “straight shooting” delivery that makes you want to believe in the things she’s saying, regardless of how they’re being spun. For me, the problem is that I know search too well for that type of spin to work on me. I just find it irritating.

I also find it amazing. Bartz is working so hard to marginalize search (last I looked, the second most popular internet activity after doing email). She’s working so hard to say that Yahoo has to give things up to Microsoft. What if she can’t dump search. What’s the Plan B? How do you recover running search on your own after having chopped off your own legs?