The bankers are earning their salaries on this one. Yahoo is said to be closing in on some sort of alliance with AOL, to thwart Microsoft's bid of course. Yahoo would gain control over the combined operations and get a big investment. That may allow it to start buying back some shares at close to Microsoft's offer price. Meanwhile, Microsoft, facing some pressure to boost its bid, may be joined by News Corporation, according to the New York Times. The combination would bring Yahoo and Microsoft's MSN together with MySpace to create a real juggernaut. Talks between Microsoft and News Corp are said to be underway. Of course that puts News Corp in the position of having talked to both side about possible deals.

For more:
- here's the article from TimesOnline
- here's the New York Times article

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