Update: Facebook issued a statement Monday saying that they are not pursuing a new search partnership.

Dive summary:

• Anonymous sources tell The Telegraph that Yahoo and Facebook are in talks to work together closely on web search.
• The collaboration should reportedly not be expected to eliminate Google because Facebook currently works with Bing on web search.
• Search engine success is based on algorithm strength, and more users from Facebook may not improve Yahoo’s algorithm.

From the article:

I don’t doubt that the Telegraph is correct that Yahoo and Facebook are talking about ways to work together, search included. It’s also incredibly intriguing that that one of Google’s former heads of non-paid search, the super-smart Marissa Mayer, is talking with one of Google’s former heads of search ads, the super-smart Sheryl Sandberg. But it’s just difficult to see what it is that Yahoo has to offer to Facebook in terms of search that it doesn’t already get from Bing.