Microsoft Considered Teaming Up With Yahoo Against Google

Microsoft held company meetings in relation to the purchase of a stake in search giant Yahoo, in order to better position itself for competition with Google, Reuters reports.

The news comes from a Wednesday report in The Wall Street Journal.

The Journal cited a number of sources close to the situation as saying that the discussions don’t seem to be active, but that Microsoft would still likely consider a deal for an equity stake due to increasing shareholder pressure, according to Reuters.

One of the possible arrangements between the two companies would see Microsoft selling off its MSN Web network to Yahoo in exchange for a minority stake in the search firm, Reuters reports.

In 2005, Microsoft considered inking a partnership deal with AOL, but Google invested a 5 percent stake in the Time Warner subsidiary, closing Microsoft out of the deal, according to Reuters.

Last week, Redmond, Wash.-based Microsoft’s earnings outlook did not meet analysts’ predictions, as the company plans to significantly boost spending on its software services business, Reuters reports.

Microsoft is expected to dole out $2 billion over the next fiscal year, and analysts say the lion’s share of that funding will be devoted to creating an Internet service business based on advertisements.

For related news coverage, read Microsoft, Google Prepare for Arms Race and Google Searches for Fight With New MS Browser.

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