Software giant Microsoft bids US$ 44 billion for Yahoo! in cash and stocks, a 60% premium over current market price. The search engine market is dominated by Google with an impressive 56% dominance (in the US). Yahoo and Microsoft account for about 31% of the pie, and the rest scattered across the multitude of search engines. But even with the merger, it isn’t such an exciting deal, and I suspect the combined market share to dip even further. Unfortunately for Yahoo, business hasn’t been very good off late and with declining profits and margins, it would seem like a good deal from Microsoft.

The combined entity may however pose a semblance of a threat to Google, and may get Google on its toes. Will Yahoo exist as a seperate entity, or will it remain a skin powered by Microsoft Live search waits to be seen.