Microsoft has issued a public statement that they will continue to explore alternatives. While Microsoft notes of possibly venturing to third parties, they haven't taken their eyes off of Yahoo! yet. Instead Microsoft intends to talk with Yahoo and explore alternative angles to their former strategy. With little to no reassurance that any transactions will result, Microsoft states that:

In light of developments since the withdrawal of the Microsoft proposal to acquire Yahoo! Inc., Microsoft announced that it is continuing to explore and pursue its alternatives to improve and expand its online services and advertising business. Microsoft is considering and has raised with Yahoo! an alternative that would involve a transaction with Yahoo! but not an acquisition of all of Yahoo! Microsoft is not proposing to make a new bid to acquire all of Yahoo! at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo! or discussions with shareholders of Yahoo! or Microsoft or with other third parties.

Yahoo!'s Response

To ensure that things would go over smoothly on Yahoo!'s end, Yahoo! also issued a public statement about the talks:

Yahoo! has confirmed with Microsoft that it is not interested in pursuing an acquisition of all of Yahoo! at this time. Yahoo! and its Board of Directors continue to consider a number of value maximizing strategic alternatives for Yahoo!, and we remain open to pursuing any transaction which is in the best interest of our stockholders. Yahoo!'s Board of Directors will evaluate each of our alternatives, including any Microsoft proposal, consistent with its fiduciary duties, with a focus on maximizing stockholder value.

What really stands out about this statement is the following line:
"[...] Microsoft that it is not interested in pursuing an acquisition of all of Yahoo! at this time."

Microsoft may no longer want all of Yahoo!, but Yahoo!'s search engine would be a very nice "alternative".

More Buzz

Leading industry experts are abuzz with news of what's really going on between Microsoft and Yahoo. Kara Swisher of Boomtown makes a note of an internal Microsoft memo with a strategy update from Kevin Johnson the president of the company's Platforms & Services division. The memo gives a little more insight into Microsoft's strategy for Yahoo, concluding that they can compete.

John Furrier the Founder and recent CEO of PodTech Network released even more interesting news today. While it's only a rumor thus far, Furrier says this:

My sources say that the Yahoo and Microsoft teams are bunkered down in a Palo Alto hotel hammering out the final stages of a transaction that will have Microsoft picking up the Yahoo search business. Word is that this deal will be done this week. While this is not surprising, it does bring to question the motives and plans of Microsoft.

Furrier also identifies why Microsoft would go through all the twists and turns to accomplish this. According to Furrier, with a failed bid for over $40 billion, Microsoft intends to buy the search business from Yahoo and move on to Facebook with a $20 million bid. "Integrating the search team at Yahoo with Facebook puts a formidable army to take on Google." Scoble seems to be taking a similar stance and even goes as far as stating how the situation explains Facebook's hostile behavior towards Google this past week.

War of the Worlds Part II

Is one of the biggest showdowns in tech history about to play out between Microsoft, Yahoo, Google, and Facebook. Can Google continue to lead the search industry with the best of Microsoft, Yahoo, and Facebook fighting against them? While, this remains to be seen, we fully intend to keep you posted as the story unfolds.