San Francisco (CA) - Yahoo has created a strategic partnership with Google and is reportedly in talks with AOL, while Microsoft may team up with News Corp to launch a new bid to take over Yahoo.
The AP suggests Yahoo's moves are "last-ditch efforts" to prevent an acquisition from Microsoft and is in effect creating a "dramatic finale" in this Internet saga.
In February, Microsoft announced it was looking to buy Yahoo for $44.6 billion but Yahoo ultimately declined, saying "our board believes the Microsoft proposal substantially undervalues Yahoo."
However, owners of the Internet stock leashed out against Yahoo, saying it was not living up to its fiduciary duty to maximize shareholder wealth.
One lawsuit, filed by pension fund group Michigan's Wayne County Employees' Retirement Group, claimed that Yahoo executives were "entrenching themselves in office and protecting and advancing their own interests at the expenses of Yahoo and its stockholders while Yahoo's stock price languishes."
On the heels of the Microsoft/Yahoo acquisition debate, Google stepped up to help Yahoo in online advertising, trying to show a higher value for Yahoo.
Additionally, Yahoo is now reportedly in talks to combine its online operations with AOL, bringing the two former Internet superpowers together to provide new advantages for both companies.
Not willing to sit idly by and still determined to bring Yahoo into its portfolio, Microsoft is also hashing out a potential deal with an online giant, News Corp. The media conglomerate owns a ton of Internet entities under its Fox Interactive Media brand.
According to the New York Times, Microsoft and News Corp may be planning to offer a joint bid to acquire Yahoo.
"This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo," said Microsoft general counsel Brad Smith.
The situation has become increasingly complex, catapulting Yahoo to the front page of the Internet industry again. It is possible that Microsoft's attempt to buy Yahoo earlier this year could actually backfire and make Yahoo a stronger rival.
Added Smith, "We will assess closely all of our options."