Executives at Microsoft and Yahoo are taking a fresh look at either a merger of the two companies or another arrangement that would pair their companies' respective strengths, say people familiar with
the situation. The renewed talks are a sign of the continued growth in Google's power and problems with in-house efforts at Yahoo and Microsoft to ride a boom in Internet advertising.
A tie-up could help solve a critical challenge for Microsoft: attracting advertisers to its online businesses. The company's online ad system, called adCenter, has failed to attract a critical mass of
advertisers. Yahoo itself suffered a delay last year in converting to a new online ad system--codenamed Project Panama--which was designed to close the gap with Google. It predicts the benefits should
begin shortly.
A year ago, Microsoft and Yahoo explored the idea of combining to form a greater competitor to Google, but that led nowhere. Neither could be reached for comment about
the new talks.
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