Rumours suggest deal talks between Microsoft and Yahoo

Microsoft Yahoo

Reports have suggested Microsoft has finally convinced Yahoo to part with its search business.

At the heart of the reports is a $3 billion deal that would see Microsoft take over Yahoo's search business, with the two sharing revenue for several years afterward. In return, Yahoo would take over selling premium advertising for the two companies, with a similar revenue-sharing deal in place.

Various sources have described the deal as "imminent" and "down to the short strokes", though the two companies have been in this position before.

Microsoft tried to buy Yahoo for $44.6 billion back in February of last year but was rebuffed by former chief executive Jerry Yang. Since then, Yang has been replaced by Carol Bartz, who has claimed that any partner looking to make a search deal would need "boat loads of money" and solid technology.

Microsoft certainly has the money and Bing has launched to largely positive reviews, meaning the technology also looks to be in place, although Yahoo has said Bing wouldn't press the firm into a deal.

An alliance between the two companies could be necessary to dent Google's search and advertising dominance.

The search giant seems immune to the downturn, with ad sales continuing to rise - pushing revenues to $5.52 billion in its second quarter.