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It's Monday but I'm sure the biggest news this week is likely to be Microsoft's abandonment of its bid to buy Yahoo, a move widely believed to have been an attempt by Microsoft to enter new Web and Enterprise 2.0 markets and solidify its standing in the field.

In a letter to Yahoo CEO Jerry Yang, Microsoft CEO Steve Ballmer cited Yahoo's decision to outsource search terms to Google and the ramifications the plan could have for Yahoo's business, suggesting that Yang was taking specific actions to make Yahoo as undesirable to Microsoft as possible. If so, Yang apparently succeeded.

People around the Web have had mixed reactions. Many believed that a Microsoft/Yahoo combination would have made good business sense, while others had been skeptical of the deal. ZDNet's Mary Jo Foley has a poll on what Microsoft should do next. Should it acquire another company? Wait for Yahoo's shares to tank and then buy it anyway? She also points out that some are calling for Ballmer's resignation after the failure of the deal and has a poll on who would replace him should that be the case.

If Microsoft decided to buy a different company, Computerworld has an article speculating on three companies it could buy instead of Yahoo: AOL, LinkedIn, and ValueClick and lists the rationale behind each potential purchase.

Apparently, Yahoo's shares also fell 21 percent after the announcement that the deal had fallen through.

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Posted by: Chris Parente at May 7, 2008 09:09 PM | Permalink