Microsoft proposes to buy Yahoo!, again.

- May 22, 2008

Microsoft Corp has proposed to buy Yahoo Inc’s search business, stopping short of a full-out merger. Earlier this month, Microsoft walked away from a proposal to acquire Yahoo for $47.5 billion. If the new deal is completed it would forge an alliance between the two companies that would represent an alternative means of competing with rival Google Inc. Microsoft confirmed on Sunday that it was talking with Yahoo about an alternative transaction that did not involve a full buyout.

The proposal from Microsoft would likely complicate ongoing discussions between Yahoo and Google. The two companies are still working on a possible search advertising partnership. Talks between Yahoo and Microsoft resumed after Microsoft insisted for two weeks that it had moved on from its pursuit of Yahoo. Yahoo shareholders criticized its board for mishandling negotiations with Microsoft. Last week Carl Icahn launched a proxy fight to force Yahoo to reopen talks with Microsoft and formally filed on Monday to nominate 10 new board members.

It seems that Microsoft is also interested in purchasing Facebook, which they already hold a small share of. Microsoft is definitely making moves to increase its market share. Google holds a 60 percent market share according to comScore. With a purchase of Yahoo’s search marketing company and possibly a purchase of Facebook, this would give Microsoft a great opportunity in gaining a larger piece of the internet pie.

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