And with this, the Microsoft / Yahoo saga gets much more interesting...

Microsoft delivered a powerful message to Yahoo's board and it came with a swift deadline: get the deal done in three weeks or watch it disappear. Ballmer hits the nail on the head:

"During these two months of inactivity economic conditions have weakened considerably. Public indicators suggest that Yahoo!'s search and page view shares have declined. Now is the time for our respective companies to authorize teams to sit down and negotiate a definitive agreement."

I continue to believe that a Microsoft / Yahoo deal is a very good thing for consumers, advertisers and content owners. Though the feasibility of a clean integration is a certain impossibility - even a slightly-sloppy integration means:

- the combination of the 2nd and 3rd search and advertising platforms which, when combined, make a far more formidable opponent to Google

- a single advertising platform that actually justifies marketers effort and budget (currently marketers designate nearly 100% of their money and time to Google - mostly because the reach and returns are better, but partially because it's too time consuming to split efforts between two second tier players)

- MS has a better advertising platform. Yahoo has better reach. Merging the platform with the audience (and leveraging the data between the two) should instantly make a marketers ROI multiples better

- Competition will make Google and the Microsoft / Yahoo entity better and push each to innovate... always a good thing

- From a content owner's perspective, I badly want a formidable challenger to AdSense. The tier two vertical networks are great - but the industry needs a stronger option for contextual advertising.

Dear Members of the Board:

It has now been more than two months since we made our proposal to acquire Yahoo! at a 62% premium to its closing price on January 31, 2008, the day prior to our announcement. Our goal in making such a generous offer was to create the basis for a speedy and ultimately friendly transaction. Despite this, the pace of the last two months has been anything but speedy.

While there has been some limited interaction between management of our two companies, there has been no meaningful negotiation to conclude an agreement. We understand that you have been meeting to consider and assess your alternatives, including alternative transactions with others in the industry, but we’ve seen no indication that you have authorized Yahoo! management to negotiate with Microsoft. This is despite the fact that our proposal is the only alternative put forward that offers your shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers.

During these two months of inactivity, the Internet has continued to march on, while the public equity markets and overall economic conditions have weakened considerably, both in general and for other Internet-focused companies in particular. At the same time, public indicators suggest that Yahoo!’s search and page view shares have declined. Finally, you have adopted new plans at the company that have made any change of control more costly.

By any fair measure, the large premium we offered in January is even more significant today. We believe that the majority of your shareholders share this assessment, even after reviewing your public disclosures relating to your future prospects....

Tons of great reading available:

Silicon Alley Insider TechCrunch Todd Bishop's Microsoft Blog