updated 08:40 am EDT, Tue May 20, 2008
MS Yahoo May See Breakup
Microsoft's proposed new transaction with Yahoo is likely to involve a breakup of the latter company, say sources allegedly close to the Wall Street Journal. The claim would have Microsoft buy Yahoo's search ad business and also divest itself of its Asian interests; in return, Microsoft would make a minority investment in the smaller Yahoo that results from the deal. A reason isn't given for selling off the Eastern assets, represented by AliBaba, though the China-based company voiced opposition to Microsoft in part due to fears of a management takeover following the abortive attempt to buy Yahoo as a whole.
Most specifics of the tentative proposal are unknown, though the effort would most likely see Yahoo drop its own search ad system in place of Microsoft's own, effectively inflating Microsoft's web ad share by putting its ads on a higher-profile search page than its own Windows Live service.
Simultaneously, Yahoo is still reported continuing talks to turn its earlier Google AdSense trial into a permanent project. The rumored deal would allow most any company to bid for search ad space on Yahoo and is believed by many observers to be a deliberate maneuver to thwart Microsoft's earlier takeover attempt as well as a subsequent attempt by institutional investor Carl Icahn to control Yahoo's board and force a Microsoft deal.