Michael Liedtke
THE ASSOCIATED PRESS

SEATTLE–Microsoft Corp. has withdrawn its $42.3-billion (U.S.) bid to buy Yahoo Inc., scrapping an attempt to snap up the tarnished Internet icon in hopes of toppling online search and advertising leader Google Inc

Microsoft is talking to Yahoo! about an alternative transaction that doesn't involve an acquisition, the world's largest software maker said Sunday.

One of the most surprising things about Microsoft's bid for Yahoo is that if successful it will make Microsoft one of the two or three largest users of open source software in the world. Google is certainly the largest. The National Security Agency may or may not be second (only the spooks know for sure), but if it is then by my estimate that would make Yahoo the third.

Today, Yahoo moved its open source cloud computing initiatives up a notch with the donation of its Traffic Server product to the Apache Software Foundation. Traffic Server is used in-house at Yahoo to manage its own trafic and it enables session management, authentication, configuration management, load balancing, and routing for entire cloud computing stacks.

After several months of discussion and speculation, the Microsoft-Yahoo buyout deal is apparently off. At least, that's what both Microsoft and Yahoo announced over the weekend. There is some speculation that Microsoft CEO Steve Ballmer made his announcement in order to topple Yahoo's share price, in order to make another offer at a lower price.

Option investors bet heavily on Monday that Yahoo might strike a deal of some sort with Microsoft Corp, spurred on in part by pressure from activist shareholder Carl Icahn.

Microsoft has proposed an alternative deal for Yahoo, a complex transaction that would include just buying Yahoo's search business, rather than a full buyout, a person familiar with the discussions said on Monday.

Microsoft wants to acquire Yahoo search and is seeking partners, including Time Warner and News Corp., to take over the rest of Yahoo's business

Analysing the rationale for Gnote; Microsoft's latest "embrace" attempt of its competitor, Java

How much are Yahoo's volunteers worth? And how much less will Yahoo be worth if Microsoft scares them away? That's the question that should be at the center of talk about Yahoo's value — both as an acquisition for Microsoft and as good company to work for with.