On Monday, The Times of London reported, citing anonymous sources, that Yahoo is actively discussing possible tie-ups not only with Google but also with AOL and Disney.
To be sure, Microsoft would also be taking on a company that has been trying to regain its business and technology edge for about two years, and that has gone through several rounds of dramatic reorganizations and management shakeups. In other words, Yahoo isn't precisely firing on all cylinders and Microsoft's Internet unit would certainly run the risk of catching that corporate malaise if it's unable to provide Yahoo with a quick cure for it.
Of course, Microsoft's Internet business has been far from a top performer as well, long suffering from lackluster performance, despite heavy investments from Microsoft. Critics also say it is afflicted by an identity crisis caused by the introduction of the Live name, which some feel has diluted the brand power of the MSN online services.
Microsoft believes it is still early days not only in search but in social media, and specifically social networking, areas which it believes are ripe for innovation and disruption.
Although the deal is aimed primarily at jump-starting Microsoft's online ad business, Microsoft has also said it hopes that Yahoo could boost efforts to make Windows and Office more Internet-friendly and bring them into the world of Web-hosted software. Microsoft has often been criticized for how slow it's moved to shed its legacy of desktop software to keep up with the innovations of Web 2.0.
Now, all of this is up in the air and it seems the next move is to come from Microsoft.