The Wall Street Journal has published a detailed account of Microsoft's talks with Yahoo!, and the reasons for the fall-out. One of the juicier bits is that Ballmer blamed the bankers involved for "screw[ing] everything up."
Perhaps. But reading through the wreckage, it seems much more likely that the gamesmanship on both sides ultimately. Microsoft still lacks a compelling voice on the web, and Yahoo!...well, Yahoo! increasingly does, too.
"They believed that we needed them much more than they needed us," one person close to Microsoft says. "Ultimately, we called their bluff."
Bravo. Now you can both fail together.
Again, I have been hoping the deal would go through because I think it. Microsoft-plus-Yahoo! wouldn't be able to force a .Net future down the web's throat, and would enable Microsoft to innovate beyond its closed platform.
Microsoft needs Yahoo!, not so that it can compete in search, but so that it can compete on the web.