Juan Carlos Perez, IDG News Service

In the end, the undoing of Microsoft’s bid for Yahoo. While the main reason Microsoft dropped its bid was a disagreement over price.

At least, that’s what Microsoft CEO Steve Ballmer maintains. As outlined in the letter he sent Saturday to his Yahoo counterpart, Jerry Yang, Microsoft discarded the option of a hostile takeover when Yahoo threatened to outsource part of its search advertising to Google.
Deriding the Google Factor

“We regard with particular concern your apparent planning to respond to a ‘hostile’ bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo today,” Ballmer wrote. “In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo undesirable to us for a number of reasons.”

It’s fair to assume that Ballmer’s hatred for the search giant grew this weekend.

An outsourcing deal would send a confusing message to Yahoo advertisers and prevent Yahoo from offering clients the benefits of a unified platform for both display and search advertising, Ballmer wrote.

He states convincingly that engineers working on Yahoo’s ad systems would head for the door, and that regulatory and legal problems would rain down on Yahoo and any company that acquired it.

“Accordingly, your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path,” Ballmer wrote.
Playing the Spoiler

[Source: Yahoo News]