• The New York Times, Thursday, April 10, 2008 11:45 AM

The third piece of the Yahoo-Microsoft plot twist is the surprising entry of News Corporation as an ally in Microsoft's contested bid for the Web portal. The combination, which would join Yahoo with Microsoft's MSN and News Corp.'s MySpace, "would create a behemoth that would upend the Internet landscape."

By throwing the weight of MySpace behind its bid, Microsoft could raise its $42 billion offer, which would effectively force Yahoo to accept. According to sources, the talks between Microsoft and News Corp. have reached a "sensitive stage," though News Corp. may still negotiate with Yahoo either on its own or as part of another deal. Either way, you have to love Rupert Murdoch's eagerness to play both sides of what will surely be one of the biggest deals in Web history.

The Times' sources had few details about the terms of a proposed News Corp.-Microsoft union. Any deal would certainly involve the media giant's Fox Interactive Media unit combining with Microsoft's MSN and Yahoo; the Times speculates that a deal would also include a cash infusion from News Corp.

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