In his letter to Yahoo’s board, Ballmer wrote, “Depending on the nature of your response, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo’s shareholders are provided with the opportunity to realise the value inherent in our proposal.”

• Why would Microsoft make an unsolicited offer of $44.6 bn for Yahoo?

Because Microsoft’s logic has always been Innovate or Buy. It makes sense to team up against a competitor —Google is the Goliath that looms over online search and advertising markets.

A merger has been discussed several times in the past though Yahoo was then confident of turning its results around — however, it has continued to slump vis-a-vis Google. Microsoft’s online “Live” ventures remain unprofitable.

• So is Google worried?

Well, going by the fact that the announcement raised Yahoo’s share price by 60 per cent and Google fell 8 per cent, the combination might finally be some real competition in a Google-dominated online world. Online advertising, which offers most bang for the buck with the advantages of contextualising and targeting viewers, is a space that Google effortlessly dominates. The combination of Yahoo’s online expertise and loyal users, and Microsoft’s offline muscle could affect that.

• If the deal goes through, how will it impact the internet service landscape?

Paradoxically, the real impact will be a constriction of choices for the internet user rather than expansion. It will hit other search engines like Ask.com, and make it harder for new entrants. Microsoft realises that more and more software is now delivered via the Web, and it is trying to aggressively ramp up its online presence. — Amulya Gopalakrishnan