Since a month, there is a silent cold war running between the two big Internet rivals Yahoo and Microsoft, since Microsoft’s Feb 1st bid for acquiring Yahoo Inc. And now Yahoo has setup talks with Time Warner to acquire their venture AOL. Yahoo previous talked with the latter but the talks intensified since Microsoft’s proposal which they rejected saying that it is lower than expected offer.

This was not just it, as Yahoo has also talked to the News Corp. to make a deal, under which News Corp. would sell one of the biggest social networking sites, Myspace to Yahoo. These two deals are a big answer to Microsoft’s offer, which decreased Yahoo’s share prices from $31 each to $28.62 each, and Yahoo expected atleast $35 per share to sell off everything. Myspace has been one of the best and competitive social networking sites, along with Facebook, Orkut, Bebo etc. If this deal goes successfully then the Yahoo-optimized Myspace would become more impressive. Everything has just downstaked Microsoft’s offer.

According to WallStreetJournal,

The discussions, which have included contact between Time Warner Chief Executive Jeffrey Bewkes and Yahoo CEO Jerry Yang, are driven at least partly by the idea that uniting Yahoo and AOL, including its Advertising.com business, would create an online advertising powerhouse. Outsourcing Yahoo’s search advertising to Google Inc., which handles some of AOL’s search advertising and has a minority AOL stake, is not currently part of the discussions, the people familiar with the matter say.

This offer from Microsoft surely got some good deals for both of them, not with each other but with other big corporates, just increasing their business. Would this cold war end?