Earlier this week I blogged about the Microsoft bid on Yahoo, which resulted in a lot of rumors and ideas about how the future would look if this actually happened.

A lot of speculations went all over the internet, but things went differenly than people expected. Where people belived that Yahoo would prefer to be taken over by Google, it is now clear that Yahoo is talking to AOL, and the company officially refused MS's bid. Their reaction was that the bid of 46.4 billion was way too low (?!). Good move. Microsoft responded yesterday with an official press release:

It is unfortunate that Yahoo! has not embraced our full and fair proposal to combine our companies. A Microsoft-Yahoo! combination will create a more effective company that would provide greater value and service to our customers. Furthermore, the combination will create a more competitive marketplace by establishing a compelling number two competitor for Internet search and online advertising. ()

MS obviously meant that it would replace it's own search and advertisement programs with Yahoo's programs, and kill the Yahoo brand. It would actually be a good idea to do so, and also replace hotmail (not created by MS as always but bought instead) with Yahoo mail, which is built on a better platform.

In other words, Microsoft would benefit enormously from this deal, Yahoo would not.

More on the subject in this overview by Businessweek online.

I discussed my opinion on the matter in the video in this post.