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Microsoft, Yahoo! talks: In the "off-again" phase
Ballmer: Yahoo! "a tactic, not strategy"

By Ina Fried

Published: Friday 25 July 2008

Microsoft CEO Steve Ballmer said Thursday that its on-again, off-again talks with Yahoo! are firmly in the "off-again" phase.

The two sides have talked on and off, he said, first about a purchase and then about a search deal.

Speaking at Microsoft's financial analyst meeting, Ballmer said: "Now we aren't [talking] and that's where things are. There is nothing under discussion between the two of us."

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Ballmer's comments followed an earlier discussion of the continued investment that Microsoft expects as it spends money in its online business.

He repeated his familiar refrain that Microsoft will ultimately be able to rival Google with or without Yahoo!.

"At the right price and with the right speed of operation it was a heck of good [option]," he said of Yahoo!. "Yahoo! for us was always a tactic, not a strategy."

Ballmer did acknowledge it faces a bit of a Catch-22 with search. With lower query volume, it attracts fewer advertisers and thus gets less revenue per query.

He said there are other options around this Catch-22 but said he wasn't going to go into those at the time.

Ballmer did reopen the Yahoo! door just a crack. He said: "Does that mean nobody will ever talk?...I suspect not."

Search unit head Satya Nadella said Microsoft is also expanding its Facebook relationship into search. Microsoft will deliver an API that Facebook can use to integrate both Microsoft's web search and its paid search results into the social-networking site.

Nadella said: "That's something they will launch in the fall."