Microsoft hit back at Google on Monday over the search company’s attempt to derail its bid for Yahoo, threatening to fight back through the regulators if its ambitions were stymied by any partnership between the two. The flare-up came as Yahoo’s options for finding a “white knight” to save the internet company from Microsoft’s $42bn cash-and-stock offer appeared to narrow. News Corp, which last year proposed merging its MySpace business with Yahoo, and NBC Universal both ruled themselves out. An alliance with Google, which was considered but rejected last year, now tops Yahoo’s list of options. Eric Schmidt, Google’s chief executive, recently phoned Jerry Yang of Yahoo, although a person familiar with the approach said it was a very informal conversation. Steve Ballmer, Microsoft’s CEO, on Monday criticised the idea of a Yahoo-Google alliance, arguing that only a deal with Microsoft could create a true rival to the search group. Meanwhile, Microsoft revealed it planned to borrow money in the capital markets for the first time in its 31-year history to help pay for a Yahoo acquisition. Lex sums up Yahoo’s dilemma: “Climb into bed with one bitter enemy to escape the embrace of another”. More details at Ft.com’s Microsoft special report.
