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Match Game

News Corp., Google, and AOL jump into the Microsoft-Yahoo takeover battle.
Tug of war for Yahoo
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Rupert Murdoch must have felt left out.

Reports Wednesday night pointed to Microsoft enlisting Murdoch's News Corp. to support its $45 billion bid to acquire Yahoo.

It's unclear what News Corp., the owner of the New York Post and Fox News Channel, can offer Microsoft in its bid to buy Yahoo, but it's likely a strategic partner to offset dramatic moves made earlier in the day by the struggling internet company.

The reports capped a tumultuous afternoon that saw Yahoo begin to take the wraps off plans to combine its Web business with AOL, share its ad business with Google, and undertake a massive stock buyback to thwart Microsoft's months-long takeover effort, which has recently started to veer toward a more hostile bid.

The battle lines are now drawn—if not clearly because Murdoch's MySpace social networking site relies on Google to serve its Web advertising—for a protracted fight for a dominant internet presence involving Murdoch, Yahoo chieftain Jerry Yang, Microsoft boss Steve Ballmer, Google wunderkinds Larry Page and Sergey Brin, and newly minted Time Warner C.E.O. Jeff Bewkes.

News of Murdoch's potential interest in a deal came at the end of a tumultuous day in the battle for Yahoo. Earlier, the beleaguered Web giant, scrambling to find an alternative to Microsoft's hostile takeover bid, announced that it had sealed a deal with Google allowing its archrival to serve ads on its network.

In a statement issued late Wednesday, Yahoo said it would "begin a limited test of Google's AdSense for Search service, which will deliver relevant Google ads alongside Yahoo's own search results."

"The test will apply only to traffic from Yahoo.com in the U.S. and will not include Yahoo's extended network of affiliate or premium publisher partners," the company said. "The test is expected to last up to two weeks and will be limited to no more than 3 percent of Yahoo search queries."

The pact between Yahoo and Google could lead to an escape hatch for Yahoo if the two companies determine that such an arrangement—on a much broader scale—could be profitable.

Yahoo's decision to test-drive a search-advertising partnership with Google is the surest indication yet of Yahoo C.E.O. Jerry Yang's desperation to find an alternative to Microsoft, which has been threatening a hostile takeover move.

If Yahoo outsourced its search advertising to Google, the company would essentially be admitting defeat in the search-advertising wars that have been running for almost a decade.

But it remains to be seen if the Google-Yahoo partnership will pass regulatory scrutiny, given Google's overwhelming dominance in the search-ad market.

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