Microsoft to buy Yahoo?

Microsoft is looking to buy Yahoo as a way of staving off Google, according to sources speaking with the New York Post. The newspaper claims that the Redmond software company is considering a deal that could be worth $50 billion to buy Yahoo to improve its distant third-place standing in search advertising, which is dominated by Google. The frustration is said to have reached a boil in recent months as Google has bought many of the companies Microsoft had been interested in, especially web advertiser double click. This in particular may have been the tipping point, as shown when Microsoft argued that Google was creating a monopoly.

"The minute you hear Microsoft start arguing against something on antitrust grounds, you know they are desperate and need to do something big," noted one of the Post's sources.

A takeover would narrow the gap in overall ads to just 13 percent between a Microsoft/Yahoo partnership and Google. However, the partnership could potentially affect not just search websites but also hardware devices. Yahoo services might be accessible through the network links on the Xbox 360 or Zune, the paper suggested.

The merger could also have an effect on third-party hardware such as Apple's iphone, which will come with Yahoo mail service as a built-in feature. Sanskrit's sansa connect already uses Yahoo's music and photo services to bolster its media jukebox functions.

Both Microsoft and Yahoo have declined comment on the report.