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The most surprising thing about Microsoft's recent $44 billion bid for Yahoo is that, so far, the software giant is the only company to have thrown its hat into the ring. There must be a handful of other organisations, AOL Time Warner and News Corp for example, that are watching closely and contemplating their own bids.

A sharp fall in its share price, disappointing financial results, the resignation of its CEO, and little prospect of significant growth in the year ahead all make Yahoo a prime target for takeover. And it's difficult to see how, despite his own misgivings, cofounder and current CEO Jerry Yang can advise shareholders that it's in their best interests to maintain the status quo and reject the Microsoft bid.

If Yahoo wants to escape the clammy grip of the Redmond company it will have to do something pretty quickly to show that it has a future as an independent business.

That something may well be a partnership with arch-rival Google. It has been reported already that Google CEO and Apple board member Eric Schmidt has indicated that his company would be interested in helping Yahoo avoid being swallowed up by Microsoft.

Google's motives aren't selfless of course. It realises that Microsoft and Yahoo together would represent a much bigger threat to its dominance than either company on its own. And then, of course, there's the opportunity to wind up and frustrate Microsoft - something that Google would relish.

Ironically

It could yet find itself the odd one out if Yahoo and Google find a way of working together that doesn't fall foul of competition laws. There is a precedent: until a few years ago Yahoo's search engine was driven by results from Google as Yahoo focused on its hand-edited directory.

It built and launched its own search engine only when it realised that the real money was to be made from text adverts in search engine results and on the websites to which they linked. By then it had already lost the war and the most it could hope for was to score a few battles and build enough market share to use as a basis for selling advertising. The problem, of course, was that in addition to having become most people's preferred search engine already, Google had years of experience in ranking sites, dealing with spam and selling adverts.

While Yahoo was still pinning its hopes on becoming every browser's start page and embracing the portal philosophy, Google's engineers were building and refining a great search engine. Yahoo was never going to catch-up.

Microsoft on the other hand never had a web strategy until it realised there were billions to be made and that sooner or later its desktop operating system and applications business would begin to decline. Its attempt to compete with Google was doomed from the off and although it still has a chunk of the search engine market, thanks in part to its Live search page being Internet Explorer's default home page, it realises that on its own it will always be dominated by Google. Hence the hostile bid for Yahoo.