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Yahoo Drops AOL Bid Talks, Microsoft And Google To Battle

Time Warner now has only two suitors for AOL, as Yahoo, based in Sunnyvale – California, stepped back, making the negociation process leaner as less parties are involved.

Yahoo! Chief Executive Terry Semel and CFO Susan Decker had "politely passed" on the deal's proposed terms in a meeting with Time Warner executives in New York.

Talks with Microsoft started earlier as switching to MSN search was on the agenda started beginning of this year.

Google has the advantage that it could perhaps more easily pass anti-trust reviews, given the extent of history Redmond based Microsoft has with anti-trust regulations.

While America Online's AIM is a hit among young people, Mapquest and MovieFone on the wave, the subscription internet access service is not doing that good, a call centre having been closed, 700 people losing their jobs.

Experts consider Google to be the most interested in Time Warner's AOL as it could bring them into the cards at the table of huge client data processors. Microsoft and Yahoo do not lack this data, therefore the increased value AOL could bring would not be felt as intensely as for Google.

The Microsoft - AOL deal would be the most appropriate in terms of corporate culture as they could both use a boost in morale and energy.

Even with talks undergoing, AOL does not sit back but continues to make acquisitions, just last week buying MusicNow from Best Buy.

Rupert Murdoch, the chairman of News Corp, is watching the bidding process, not making any statements as to his intentions. He spent, in the recent year, $1.4 Mln in acquisitions of online businesses like MySpace and IGN.

"There are a lot of things happening, but they are all too sensitive to be talked about in public at this stage."

News Corp posted a $433 Mln loss but beat expectations with revenue from Fox News and 20th Century Fox film studio, as newspaper circulation ( The Sun, The Times and News of the World ) fell.