Yahoo and Microsoft in partnership talks again

Steve Ballmer has already met Carol Bartz to discuss the deal, according to reports

Yahoo and Microsoft are in talks again, but this time it's a partnership deal on the table rather than a proposed acquisition, according to reports.

Yahoo chief executive Carol Bartz and Microsoft chief executive Steve Ballmer had a face-to-face meeting last week, as part of negotiations begun in the past few weeks, said a report in All Things Digital.

The proposed tie-up involves looking at the various commercial opportunities that a search and advertising partnership would present. The report cites "a variety of sources", saying that the talks between Ballmer and Bartz and other executives on both sides are "preliminary and wide ranging".

The talks may come as a surprise to some, given that Microsoft seems to have been pushing ahead with its own search plans under the Kumo codename. The firm even poached Yahoo's head of engineering for the Search and Advertising Technology Group, Qi Lu, to lead its own search and online advertising efforts.

A tie-up between the two would make sense, given Google's continued dominance in the search and online advertising markets.

Googe currently has around 60 per cent of the market, with Yahoo some way off in second place with 20 per cent and Microsoft even further behind.

Bartz has repeatedly sent out signals that she will not be pressured into selling off parts of Yahoo's business.

Commentators have generally agreed that the firm shows more direction and purpose with Bartz in charge, although it still has problems, and could be amenable to a deal, given the ground it still has to make up to challenge Google.