Microsoft calls Yahoo to the negotiating table

Microsoft is still keen to link up with Yahoo

Microsoft's chief operating officer has called on Yahoo to come to the negotiating table to discuss how the pair might team up to take on Google.

Kevin Turner said in an interview with The Times that Yahoo chief executive Carol Bartz should begin talks with Microsoft over forming some kind of alliance. He did not suggest a full buyout, but made it clear that a smaller deal could be possible.

"They have a new chief executive, and she's formulating her business plans," said Turner. "We have certainly made her and the Yahoo board aware that if they are ever interested in an opportunity to partner on search, we would like to sit down and at least have the conversation. It has to make economic sense to both parties."

Microsoft is reportedly still keen to link up with Yahoo to challenge Google's search dominance, but Yahoo appears to be less interested. Yahoo admitted last week that it spent $79m (£55m) fighting off Microsoft's moves to take over the company.

In addition, Bartz has just begun a management reorganisation at Yahoo, and is likely to see whether that bears fruit before starting talks with Microsoft.

Microsoft's search operations are a distant third in the market, behind Google and Yahoo, but the company hopes that its new Kumo search engine will help to gain market share.

Turner also refused to rule out the development of a Microsoft-branded phone, along the lines of Apple's iPhone.

"Sure, we think about it, and, sure, it's on the table," he said. "But that's not our direction today. For now we'll work with our partners. After all, we're going to sell 22 million copies of Windows Mobile this year."