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Yahoo to choose Google over Microsoft bid?

Shared revenue better than hostile takeover

Yahoo has stepped up its talks with Google as it looks for alternatives to Microsoft's unsolicited $44.6bn takeover bid, according to the Los Angeles Times.

And in an email to employees filed with the US Securities and Exchange Commission, Yahoo CEO Jerry Yang told employees that the board was "thoughtfully evaluating a wide range of potential strategic alternatives in what is a complex and evolving landscape. And we've hired top advisers to assist through the process."

According to the LA Times, Yahoo has hired investment banks Goldman Sachs and Lehman Brothers to evaluate its options.

Google said it had no comment on the story. Yahoo could not be reached for comment.

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A source familiar with the deal told the LA Times, "Jerry is as motivated as hell to try anything he can. Google is hypercompetitive, and it wants to do anything it can, anytime it can, to stop Microsoft from getting one foot in the door."

According to the LA Times, former executives said Yahoo has been interested in turning over its search-advertising business to Google. That would mean that Google would place paid ads on Yahoo search pages and the companies would then share the revenue generated from those ads. It's a move that would increase revenue and cut costs for Yahoo.

By combining the assets of Microsoft and Yahoo, Microsoft is set to make a run at Google's share of the online-advertising market. For its part, Google is doing what it can to challenge the deal on antitrust issues. Analysts have said Google can't bid for Yahoo outright because such a deal wouldn't pass regulatory muster.

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