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With Proxy Fight Threat, Is Microsoft Boxing Yahoo In--or Itself?

As everyone waits for Yahoo to make the next move in Microsoft’s unsolicited bid to buy the Internet portal, I’m starting to wonder if the ball’s actually still in Microsoft’s court. As it stands, Yahoo has declined Microsoft’s initial offer, and as it has courted a number of alternate bidders with no apparent success yet, Microsoft this week ratcheted up the pressure with a threat to launch a proxy fight to replace Yahoo’s board. But it sure doesn’t look like Yahoo is in any big hurry to respond.

Why? For one, talks with News Corp., AT&T, and others aren’t all dead yet. But Yahoo also may understand that it has a bit of leverage of its own: Microsoft clearly would prefer to avoid a proxy fight. Even if Microsoft wins it, it potentially extends the time it takes to win Yahoo by several months. Meanwhile, more good people exit Yahoo and Google gets to keep gaining ground on both Yahoo and Microsoft.