Yahoo Revives TW Talks as Microsoft Hovers

04 July 2008

SUNNYVALE, California: Ailing internet pioneer Yahoo has reportedly resumed discussions with media and entertainment giant Time Warner over a possible link with the latter's equally troubled AOL web unit.

The pair began talks about a future together in the spring when Yahoo was fending-off an unsolicited approach from Microsoft - subsequently withdrawn, much to the fury of some investors.

The latest partnership, were it to go ahead, would fold AOL into Yahoo, while TW would take a minority stake in the combined venture.

Yahoo has, in the meantime, inked a deal with Google that will allow it to run some search advertising sold by its erstwhile rival in exchange for some of the revenue.

This move has attracted the attention of US Department of Justice antitrust investigators who are probing the implications of such a tie-up within the online search market.

It is believed investigators will demand documents not just from the two parties involved, but from other media and online firms.

Comments Peter Guryan, a former Justice Department antitrust lawyer: "It doesn't mean they have drawn any conclusions [but] it is a significant step beyond a request for voluntary information. It demonstrates that the DOJ clearly has questions."

Waiting in the wings, while the action unfolds center stage, is Microsoft, still apparently planning another approach to Yahoo.

This time, say anonymous sources, it could be a two-pronged attack in alliance with News Corporation, which would fold its MySpace social networking website into Yahoo, while the software colossus swallowed up the search business.

The Yahoo board is under enormous pressure to come up with a long-term strategy for its future prosperity and expects a stormy annual meeting at the beginning of August.

Data sourced from Washington Post Online and Wall Street Journal Online; additional content by WARC staff