Report: Microsoft wants to buy Yahoo's search business

Over the weekend, Microsoft said it "raised with Yahoo an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo." Sources told Kara Swisher that the alternative deal is an acquisition or partnership to give Microsoft control over Yahoo's search marketing business. Yahoo would keep everything else — notably its display advertising business — and Microsoft would control 30 percent of the search market. Perhaps more importantly to Microsoft, it would prevent Google from controlling more than 80 percent of the market with its own Yahoo deal. In its statement, copied below, Microsoft said it reserves the right to change its mind about the deal. We are utterly unsurprised.

In light of developments since the withdrawal of the Microsoft proposal to acquire Yahoo! Inc., Microsoft announced that it is continuing to explore and pursue its alternatives to improve and expand its online services and advertising business. Microsoft is considering and has raised with Yahoo! an alternative that would involve a transaction with Yahoo! but not an acquisition of all of Yahoo! Microsoft is not proposing to make a new bid to acquire all of Yahoo! at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo! or discussions with shareholders of Yahoo! or Microsoft or with other third parties. There of course can be no assurance that any transaction will result from these discussions.