Shares in internet giant Yahoo have gained 7% after reports emerged that the company has resumed talks with Microsoft about forming an advertising and search partnership to take on the might of Google, according to a prominent technology blog.
The two companies first began discussions last year, but Yahoo former chief executive Jerry Yang decided against the move and spent $79 million in fending off a $US31-a-share takeover bid from Microsoft.
But analysts have suggested that since Yang’s departure from the company in November, Yahoo would be in a good position to resume talks with the software giant after Carol Bartz took over the chief executive position.
Reports have since emerged from tech blog All Things Digital that the two groups met last week to discuss partnerships, which may include advertising deals or even Microsoft outsourcing its search department to Yahoo.
Microsoft chief Steve Ballmer and Yahoo chief Bartz have both declined to comment, but the companies have been hinting at partnerships for a few weeks now.
“Unless I’m fooling myself, over time I would expect there’s a good opportunity for a deal,” Ballmer said in a press conference last month.
The company has also hired Yahoo’s former vice president of search and advertising technology, Qi Lu, as the head of its online services unit.
But even if a partnership or takeover deal goes ahead, the companies will still lag well behind search giant Google, which maintains a 63.3% hold on the US search market.
Yahoo holds just 20.6%, while Microsoft’s share is at 8.2%, according to figures from research firm ComScore.
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Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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