Blogs

Here's a preview of a story I wrote for Thursday's newspaper. I'll post a link to the full version when it's available online. (Update: Here it is.)

Microsoft's bid to acquire Yahoo has suddenly become a lot more competitive, or at least a lot more crowded.

Several giants of the Internet were revealed to be exploring separate partnerships, combinations and alliances Wednesday in a dizzying series of events that could reshape the online world -- if they ultimately come to pass.

The various discussions -- involving Yahoo, Microsoft, Google Inc., News Corp., and Time Warner's AOL unit -- are all part of the aftermath of Microsoft's $44.6 billion offer to buy Yahoo. The Sunnyvale, Calif.-based Internet portal has been working to strengthen itself against Microsoft's acquisition bid, hoping to evade or sweeten the offer.

The news began Wednesday with Yahoo's announcement that it would run a limited test of Google's advertising system alongside results from its own search engine, as part of a short-term agreement with Google. The company is looking for ways to boost revenue, and Google's advertising system makes more money than Yahoo's does.

Later in the day, The Wall Street Journal, citing anonymous sources, reported that Yahoo was also getting close to a deal to combine its Internet operations with AOL, as an alternative to a Microsoft acquisition.

The New York Times, also citing anonymous sources, reported separately that Microsoft was talking with News Corp. about joining its Yahoo bid, raising the possibility of combining Yahoo, Microsoft's MSN and News Corp.'s MySpace social networking site under one umbrella.

It's not uncommon for one acquisition bid to spark a wave of industry consolidation, said Marc Edelman, a New York Law School professor. What's unusual about this situation, he said, is the array of companies and markets involved in the possible alliances -- including online services, Internet advertising and social networking markets.

"The net effect of all of this is going to be very complicated, and something presumably the Department of Justice, as well as possibly the Federal Trade Commission, is going to need to take a very close look at," he said. "It's going to take very detailed economic analysis -- more so than your traditional two-companies-into-one merger."

However, Edelman noted, there's no assurance that any of the behind-the-scenes talks will result in deals, despite the sudden explosion of activity.