Microsoft, Yahoo! close to online alliance: report

Software giant Microsoft and internet major Yahoo! are close to reaching an online partnership that could challenge the dominance of Google in the search business.

The Financial Times has reported that the two companies are on the brink of sealing an online alliance.

Quoting a person close to the discussions, the daily said that an agreement could be announced on Wednesday.

"The talks picked up steam late last week after the two sides reached the outlines of a deal in which Yahoo! would not receive any upfront payment, as Microsoft had initially offered in the middle of last year, but the two sides would divide future search advertising revenues," the report published online today said.

According to the publication, for Yahoo!, the partnership would bring an influx of cash at a time of declining revenue in its search business.

"A successful completion of the talks would mark an end to Microsoft's 18-month pursuit of Yahoo!, which began with an unsolicited full takeover bid that rocked the internet world," the daily noted.

The  report said Microsoft has been pushing for a looser alliance that would combine the search technology and search advertising systems of the two companies and give them a better chance to catch up with Google.