There are rumours circling around the internet that microsoft is in talks with yahoo once again (this time with a $10 billion bill), Does that make any sense? Atleast for me doesn't.

It is well known fact that Google is the king of search and holds position #1 in the search market followed by Yahoo as #2 and Microsoft's Live a #3 position. But since microsoft started talking about acquiring yahoo for $40 billion that is kind of shaken now. Yahoo stupidly rejected the offer and Google tryed to offer yahoo a helping hand by working out a Ad., deal. But unfortunately due to trade practices and certain laws Google has to walk out.

Since Google has walked out yahoo shares starts plunging day by day, company loosing value, CEO is quitting, 1000's of employees laid off and as a by product yahoo search is loosing market leadership.

Microsoft's Live is making some noticeable progress due to the cash back deal, yahoo disruption etc., If this keeps going on for a while and since Live is #3 it is naturally going to pick the #2 spot.

Given the above facts it doesn't make any sense why should Microsoft spend $10 billion dollars to acquire yahoo. Instead they can spend that money in improving Live search and search related products which may help them get the #2 spot better. With Google #1 and keeps innovating, it doesn't appear that any other search provider can even gain a little bit of its market share.