...commentators insist that the Yahoo/Microsoft deal is all but inevitable, Rupert Murdoch disagrees. And I think he might know"after all, his properties, especially News Corp, have been courted by both sides almost since the beginning for support in brokering and/or funding a deal.

Murdoch said at the Allen & Co conference:

There wont be a deal. Theres bad personal feelings. In six months, (Microsoft) will walk away.

Ouch.

Meanwhile, Jerry Yang tends to agree that a Microsoft deal is anything but a foregone conclusion"especially if the shareholders elect Icahns proxy board next month. In an interview with Boom Towns Kara Swisher, Yang outlined his dark vision of his babys future with Icahn at the helm (emphasis added):

I think handing over the company to Carl Icahn for the express purpose of hoping he can negotiate a complex deal with Microsoft is a big mistake for shareholders. This is particularly true since Icahn has no plan B and therefore will have no leverage and will be dealing with Microsoft from a position of weakness.

Furthermore, Microsofts interest in Yahoo has been inconsistent at best and they refuse to even put a firm proposal on the table. Their motivations are suspect and there is simply no good reason to think they will actually show up at the end of the day.

And then what will shareholders be left with? A weakened, Icahn-controlled Yahoo.

Obviously, Yang has some reason to believe (and even hope) that things wouldnt work out for Icahn and Microsoft"but what is Murdochs motivation in saying that there wont be a deal?

And finally, another note that has been repeated in our comments: does any of it matter? Personally, Id say yes and no. Were watching the number two and three players in the search field expend much if not most of their energy in what looks like a battle to the death.

Just because MSFT and YHOO have around 30% of the search market together doesnt necessarily mean that it would stay that way if they merged. And doubtlessly the continual fighting (followed by legal maneuvering for approval if a deal ever does get made) can only distract the management of these companies from their products and services"leaving the market wide open for Google.

Even though Google CEO Eric Schmidt thinks an independent Yahoo is best for the industry"and you know that means its suspect"I really havent seen a compelling reason that a Microsoft-owned Yahoo would do any better than they are now. Honestly, it seems like Microsofts leadership is even more clueless about search and giving them the #2 slot will only weaken both properties.

Bernard Lund at Read Write Web agrees"an independent Yahoo is not only important but beneficial to the industry (and he doesnt run Yahoos biggest competitor). Lund also points out well that Yahoo may be #2 in search, but they dominate in other important areas (there are other areas?!), and its premature to discount them as a major player so greatly as to suggest that pairing with the declining, distant third would enhance their position.

What do you think"does Yahoos independence matter, and will they be able to keep it?

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