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So it’s official now that Microsoft has abandoned its plan to acquire Yahoo. But you never know when in future Microsoft may go again after Yahoo because “never say never”.

The question arises though as to what was the main reason of deal failure?

Well it’s nothing but a threat from Jerry Yang co-founder Yahoo that if Microsoft goes hostile, Yahoo will pursue its deal with Google for online ads. This was the final nail in the coffin.

Although things weren’t going very smoothly from the beginning but at least in the last few days both parties were negotiating as Microsoft increased its bid per share to $33 and Yahoo decreased from $40 to $37. But the kicker was Yang’s threat: If Microsoft launched a proxy fight, Yahoo would pursue a Google deal to outsource its online ad business.

Also Yang continues to raise the issue of possible anti-trust regulatory rope hanging a Microsoft-Yahoo deal.