In a last ditch effort to seal a deal, Microsoft said it offered to buy $8 billion worth of Yahoo shares at $35 each in addition to its search business, for another $1 billion. President Kevin Johnson revealed these details-which will no doubt place greater downward pressure on Yahoo CEO Jerry Yang-in a rhetoric-filled email to employees last week. "This partnership would have created a stronger competitor to Google, providing greater choice and innovation for advertisers, publishers and consumers,'' Johnson wrote, adding that Microsoft opposes Yahoo's search partnership with Google because the deal would secure more than 90 percent of …

The New York Times' Joe Nocera writes a scathing memo to Yahoo's Jerry Yang, essentially telling shareholders that the company's co-founder should be ousted as CEO. Rarely do you see a respected publication like the Times take such a defined position, but Nocera is clear in his castigation of Yang's handling of the Microhoo saga, claiming that he acted more like a protective father than a responsible CEO. However, Yahoo is no longer Yang's baby. It's a public company now, which means it belongs to shareholders. As such, the CEO reports to these shareholders, and his actions are accountable to …

GigaOm's Om Malik says the social networking sector is going through a "harsh, but necessary, sanity check." For starters, comScore reported plateauing growth for MySpace and Facebook in the U.S. Lower down the sector rung, Revision3 canceled a video show dedicated to social networking called SocialBrew, while Monster killed its social networking service, called Tickle, and Verizon shifted its little known social network to Facebook. Malik claims these moves indicate that the plethora of Me-too networks out there are finally starting to shake out, due to a lack of monetization. Indeed, social networking is hard to make money from; eMarketer …

Billionaire investor Carl Icahn dropped the first hint that he may be preparing to suspend his proxy fight against the Yahoo board, following the Web giant's announcement of a new Google partnership last week. In an interview with Reuters, Icahn said he thinks the Google deal "might have some merit" and is "better than the alternative deal proposed by Microsoft." Icahn's (sort of) about-face is important, says Silicon Alley Insider's Henry Blodget. In the Google deal, there's a change of control provisions that allows either Google or Yahoo to terminate the search arrangement in the event that Yahoo …

TechCrunch's Michael Arrington, for one, was not impressed. He writes: "I don't believe that there is anything Yahoo could do at this point to further destroy their business that would surprise me." Not only did the announcement of a Yahoo-Google search partnership seal Google's search monopoly, it also sent Yahoo shares tumbling: the stock had fallen from around $26 per share on Thursday to under $22 in early Friday trading, wiping out around $4 billion in market capitalization. Yahoo is now worth $30 billion; Microsoft would have bought the company for $47.5 billion a month ago. Are shareholders pissed? You …

Almost alone in his praise of the Yahoo-Google deal, Silicon Alley Insider's Henry Blodget suggests that the Yahoo board essentially made the best out of a crappy hand. Blodget describes the deal as "smart," because it instantly adds a lot of cash flow in the first year, and even more in years 2-4, all without Yahoo having to spend a dime. The company also gets to keep its mightily expensive/mightily disappointing search platform Panama, and decide whether or not to phase it out over the next few years. Yahoo has probably already decided to do this, but it can't tell …

A Microsoft source had this to say to Kara Swisher following the announcement of the Yahoo-Google search deal: "Let loose the dogs of war." Indeed, we've seen this kind of scorched earth rallying cry from the software giant before: last year, Microsoft unleashed its extensive network of lobbyist minions to keep Google's DoubleClick deal from happening. The result: a year of regulatory scrutiny. As Swisher says, that struggle "is going to be like a minor playground scuffle compared to the howitzers BoomTown expects Microsoft to unleash over this." Even so, the Silicon Valley veteran thinks the expected pressure on the …