Microsoft, Yahoo re-enter merger talks

— 9:22 AM on May 4, 2007

Merger talks that took place between Microsoft and Yahoo a year ago ended up failing, but according to the Wall Street Journal, the two companies are taking a new look at the possibility (subscription required) as a means to face competition from Google. The WSJ quotes "people familiar with the situation" as saying executives at Microsoft and Yahoo have entered early-stage discussions, and that they're once again exploring the possibility of either a merger or "some kind of match-up that would pair their companies' respective strengths."

Management changes at the two firms reportedly make the merger more likely to happen than last year, as do delays Yahoo has suffered in implementing an online advertisement system with which it can catch up to Google. Last year, managers at Microsoft pushed for the firm to rely on in-house search and ad systems instead of buying Yahoo, but the WSJ says several of the architects behind those systems have now left the company. Microsoft CEO Steve Ballmer is also being pressured to make an acquisition in order to boost Microsoft's online efforts, the WSJ adds.

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