Microsoft and Yahoo are reported not actively talking on the merger anymore. However the desperation of Microsoft in competing with Google in search and online-ads market might result in Microsoft and Yahoo to form an alliance or some sort of co-operations between the two.
Yahoo does not seem to be interested in full-scale deal at this time and what Microsoft is putting on the table. The two companies used to be partners where Yahoo provides Microsoft with its search engine technology and advertising backend, however Microsoft jumped the ship from that relation in favor of its own in house technology.
At this moment, the “talk” is reported to have cool down and both companies spokesmen declined to comment on this issue. If the talk heats up again, we might be able to see MicroHoo!
Microsoft, Yahoo Discussed Deal [via wsj]