Rumors about AOL and Yahoo merging earlier in the year seemed very plausible, but dried up as the friction between Microsoft and Google increased. Yahoo's talks with Microsoft went sour afterward, and the company was apparently dead set on not selling out to Redmond - at least not for the price offered.
All of this has come full circle, and now it appears that AOL and Yahoo are once again discussing a possible merger in the near future. Apparently, even with their stock suffering after the Microsoft fiasco, Yahoo feels confident enough to buy AOL from Time Warner and use it gain leverage in search.
If Yahoo acquires AOL, will it help them avoid being absorbed by a larger company in the future, perhaps with the added benefit of a Google partnership as well?