AOL (TWX) Bidding War Between Microsoft (MSFT) and Yahoo (YHOO)?

One thing’s for certain: The collapse of the Yahoo-Microsoft (YHOO / MSFT) deal could be the best thing to happen to Time Warner’s Jeff Bewkes for a good long time.

Yahoo reportedly has a deal teed up to buy AOL for about $10 billion. We suspect that the newly dumped Microsoft may have something to say about that.

AOL wouldn’t give Microsoft what Yahoo would have, but it would help the company strengthen its web-based communication busines (AIM, AOL Mail, etc.) Mapquest could be a nice fit with Microsoft’s mapping products. Advertising.com, Tacoda, et al, (Platform A) would give Microsoft a major jumpstart in the third-party display business. And AOL’s 6% search query share would at least bring Microsoft solidly above 10% of the search market.

Microsoft could easily outbid Yahoo for AOL–and, for obvious reasons, might be in the mood to. As long as it doesn’t pay too much for the wreckage of its once-dominant web competitor (and then integrates it successfully), the deal would likely make sense.

See Also: Microsoft Walking

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