Yahoo and Microsoft

Ultimately, a Yang Yahoo rejected the offer. This February, MSFT CEO Steve Ballmer was stunned that Yahoos new CEO, Carol Bartz, wasnt interested in a deal.

But now, according to AllThingsD, things have changed, and the two companies have been in talks for weeks, culminating in a face-to-face meeting with Bartz and Ballmer:

According to a variety of sources, the talks between the pair and also other execs at both companies are preliminary and also wide-ranging, focused on what kinds of commercial relationship Yahoo and Microsoft could have in the future.

But, cautioned sources close to Yahoo, the discussions are not about a renewed acquisition attempt by Microsoft and also might not result in any deal.

Sources say that Yahoo is determined to keep control of its search business, but the exact incarnation of a deal isnt set yet:

Thus, sources said, the talks includes many scenarios, such as one in which the companies swap online advertising assets and deliver services to each other.

In that interesting plan, Yahoo might take over all of Microsofts display and premium advertising business to sell along with its own, while Microsoft would run the search advertising business for the pair.

Such a deal, which plays to each companys strengths, would bind the two closely together, even though they still compete on many other fronts in the Internet space.

It also joins their forces, creating a sale that is much more attractive to advertisers and allows for better competition against search powerhouse Google (GOOG).

This is an interesting prospect. As much as Id like to see an entity that could offer Google real competition, I dont think Microsoft buying Yahoos search program would actually offer that, Im excited to hear about alternative deals.

What deal do you think is the best match for the two companies?

Included links: Microsoft Pounces, Yahoo Rejects, Yahoo and Google Announce, Google Terminates, CEO Jerry Yang

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