If Yahoo's rejection of Microsoft's bid last week was a holdout for more money, the tactic may just have failed. Bill Gates talked to various media yesterday regarding the bid and asserted it to be a fair offer. This should give a good hint that Microsoft is not willing to offer more money to the search giant, despite Yahoo's Executive board believing it to be a “gross undervaluing” of the company.

Gates also mentioned that "with or without Yahoo", they can afford to invest heavily in all the engineering and marketing necessary to enlarge their presence in the online market. The Yahoo acquisition would have been a nice shortcut albeit a very expensive one. Yahoo may need to reconsider.