Google is doing everything possible to make Microsofts job hard in this takeover. Google has agreed to help out Yahoo by participating in an unusual test that will gauge how much more advertising Google can sell for Yahoo!

The two-week experiment will be limited to ads posted alongside a small percentage of Yahoo's online search results in the United States.

Yahoo clearly wants to build on that by combining its online operations with AOL, Google already handles AOL's search advertising and owns a 5% stake in the Time Warner subsidiary.

As part of the AOL deal, Time Warner would make a cash investment in return for a 20 percent stake in the combined entity, according to a Wall Street Journal story that cited unnamed people familiar with the matter. Yahoo then would use the Time Warner cash to buy back stock to put some money in shareholders' pockets. Yahoo would pay between $30 and $40 per share for an unspecified amount of stock, the Journal said.

Microsoft's bid was worth about $42 billion, or $29.24 per share, as of Wednesday, when Yahoo shares closed at $27.77.

Microsoft reportedly may mount its counterattack with a surprising ally -- Rupert Murdoch's News Corp. If Microsoft and News Corp. were successful in a joint bid, it would unite three of the Internet's most popular Web sites -- Yahoo, along with MySpace and MSN.com.

The New York Times reported Microsoft's discussions with News Corp. late Wednesday, citing people involved in the discussions.

Yahoo had previously been exploring using an alliance with MySpace as one of its escapes from Microsoft.

All the negotiations are at a sensitive stage and still could unravel, according to the newspapers' reports.

Contacted late Wednesday, a Yahoo spokesman declined to comment on the reported AOL talks. Microsoft representatives didn't respond to inquiries.

The complex web of deals faces various complications.

Because Google and Yahoo control a combined 80% of the U.S. search market, any long-term advertising alliance between them almost certainly would have trouble getting antitrust clearance, analysts said.

A broader relationship between Yahoo and Google also would face intense political scrutiny, said Sen. Herb Kohl, D-Wis., who chairs a committee overseeing antitrust issues.

A Yahoo-AOL combination probably would have to overcome shareholder skepticism because both companies have been fading in recent years. Before Microsoft announced its bid Jan. 31, Yahoo's market value had plunged by nearly $30 billion during a two-year period. AOL is now believed to be worth about $10 billion, about half of its value when Google paid for a $1 billion stake in 2005.

Microsoft has set an April 26 deadline for Yahoo to accept its current offer, which was initially valued at $44.6 billion, or $31 per share. The deal's value has eroded because Microsoft wants to pay for half of the acquisition with its recently declining stock.

Analysts have said that Microsoft can afford to pay about $35 per share, or about $50 billion, for Yahoo without undermining its future earnings. Yahoo has indicated it thinks its franchise is worth at least $40 per share, or more than $55 billion.

In a statement Wednesday, Microsoft reiterated its bid is fair and pointed out the antitrust problems likely to prevent Google and Yahoo from working together.

"This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo," said Brad Smith, Microsoft's general counsel. "We will assess closely all of our options."

Microsoft has said that if things can't be worked out amicably, it is prepared to oust Yahoo's 10-member board in a proxy contest that could prolong the drama into the summer.