Microsoft’s attempt to buy Yahoo is not a new news, they are pursuing merger discussions from last 3 years. Although Yahoo was one of the first company to popularize we searches going back to mid 1990’s, Google has stormed ahead in last few years. Microsoft which is one of the world’s most dominant software maker, not been able to match MSN/Live with Google.com’s search compatibility either.

Microsoft and Yahoo struggles to compete with Google for the lucrative online advertising market, which is currently $40 Billion and expected to grow t0 $80 Billion by 2010. At present Google is sharing almost 40% of the US online advertising. If Microsoft’s bid succeeds, it will be the biggest merger in technology space after AOL acquired Time-Warner for $164 billion in 2000 during the heydays of the technology boom.

With Yahoo, Microsoft plans to create more revenue streams. As estimated by Nelson Online, Google is currently sharing 56% of the US Web Searches, compared to Yahoo’s 17% and Windows Live 13%. Together they will be sharing a whooping 30% of US web searches at once.

The deal (If Materialized) will be a win win situation for both of them and it will seriously change internet landscape. Google will be having a serious competition at a time, when it seemed that it’s lead in internet was unassailable. Microsoft’s proposed buyout will redefine the metrics of world Internet Space for sure.