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Microsoft abandons its attempt to buy Yahoo

After three months of courtship, software giant Microsoft has abandoned its attempt to buy Yahoo. It seems that the two companies couldn't agree on a sale price. Microsoft chief executive Steve Ballmer sent his Yahoo counterpart Jerry Yang a Dear John letter to tell him that the relationship was officially over.

According to Ballmer, Microsoft had offered $47.5bn for Yahoo's services but Jerry Yang & Co. wouldn't accept anything less than $53bn. The software giant was hoping to seal the deal in order to challenge Google's dominance of the internet advertising market which will be worth a staggering $80bn by 2010.

In his letter to Jerry Yang, Mr Ballmer also made it clear that Microsoft will not resort to its original plan B: an attempted hostile takeover of Yahoo. Instead Microsoft will look at alternative strategies to challenge Google's internet advertising hegemony.

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