Microsoft was all over the news this week and its CEO was on the move – in more ways than one.

Thus, this week’s Web Week in Review is dedicated to the software company everybody loves to hate.

Microsoft not bidding to buy Yahoo

Under pressure from its Gordon Gekko, Yahoo is back at the negotiating table with Microsoft. This time, however, the parties are reportedly discussing a different deal.

According to Reuters, Microsoft-Yahoo 2.0 contemplates Microsoft purchasing Yahoo’s search business and a minority stake in the company.

Analysts are noting that such a deal could eventually lead to a full merger. A UBS research note observes:

“A near-term deal could act as an intermediate step that would go a long way toward testing the waters.”

Instead of jumping into the sack, a more prolonged courtship may have its advantages for both parties and could even be enough to placate Yahoo’s disgruntled shareholders – for now.

I would argue, however, that there are substantial risks to any deal and if a more limited relationship does not blossom as expected, I think Yahoo shareholders will probably look back and realize that the most bang for the buck would have been for Yahoo to take the money and run.

Microsoft Dangles Rebates for Web Shoppers

If Microsoft believes its strategy for cutting into Google’s online advertising dominance is dependent on acquiring Yahoo, it’s doing everything it can to hide it.

The Redmond giant has launched Live Search Cashback which gives users rebates when they purchase products from participating retailers through Live Search.

Bill Gates thinks that Live Search Cashback will help it compete with Google and has gone so far as to say:

I think years from now you may look back and say, “Wow, search started to get a fair bit more competitive.

While I think it’s too early to make such a statement, I like the concept. It’s good for advertisers, many of whom prefer CPA to CPC; it’s good for consumers, who are always looking for a bargain; and it just might be good for Microsoft.

Microsoft’s challenge is to execute well and market Live Search Cashback effectively.

The interesting thing is that even if it doesn’t gain significant marketshare, Microsoft can still impact Google.

As some analysts have noted, Microsoft’s model could mean “a reduction in margins for search advertising” if others, such as Google, are pressured into creating similar offerings.

The industry for online rebates and coupon services has not grown as fast as I had thought it would and I have come to the conclusion that a major reason is that standalone destinations for rebates and coupons just don’t have enough appeal.

By integrating rebates into the ubiquitous process of search, Microsoft just might have provided one way for marketers to better leverage rebates and coupons online.

It’s certainly worth a shot and given its position, I don’t think Microsoft has a lot to lose.

Larry Page: A Google-Yahoo deal could be a win-win

Microsoft “has a history of doing bad stuff” and shouldn’t be allowed to acquire Yahoo.

Those are the words of billionaire Google founder Larry Page, who explained Thursday that his “do no evil” search behemoth would be a better partner for Yahoo.

Page addressed concerns that Yahoo would reduce competition in the internet search and advertising industries by outsourcing some of its business to Google, which itself increasingly looks like a monopolistic force.

He explained:

“There are ways to structure a deal with Yahoo that are reasonable, for us and for Yahoo to remain independent.”

That sounds nice, but I’m not buying it.

While there’s no doubt that Microsoft has not been a corporate saint, arguing that this should give Google the ability to build a de facto monopoly of its own isn’t a good thing.

Google’s “growing presence in the capital” hints that the company is increasingly looking to wield influence and has fast become indistinguishable from other major corporations (like Microsoft) that, for better or worse, feel the need to convince politicians to, at the very least, be mindful of their interests.

While that’s to be expected and I don’t have a problem with it, pretending that Google is benevolent and Microsoft is malevolent is disingenuity at its finest.

EU will probe Microsoft’s ODF move

Skeptical over its announcement that it would support the ODF (OpenDocument Format), the European Union’s antitrust regulators are still “investigating claims that Microsoft abused its market-leading position in the application suite business by not providing competitors the technical information they needed to craft software that worked smoothly with Office.

As much as I love Europe, in a rare moment of agreement with TechCrunch’s Michael Arrington, I too would argue that the EU’s relationship with Microsoft does most closely resemble that of a bank customer with an ATM.

At some point the bank should implement a daily withdrawal limit.

What will be the effect of Microsoft joining the OLPC?

Google isn’t the only technology company that wants to save the world.

Microsoft, in a gesture of true selfless philanthropy, wants to make sure that when every child gets a laptop as part of the One Laptop Per Child initiative, that laptop has Microsoft software installed.

For the benefit of the children, of course. Or not.

As noted by The Guardian’s Charles Arthur: 

It’s hard to see it really benefit the wider population as much as it will Microsoft.

In addition to receiving $3 per laptop sold, Microsoft will gain the satisfaction of knowing that children in developing nations will be challenged, like their wealthier Western counterparts, to contemplate the true meaning of the “Your current security settings prohibit running ActiveX controls on this page” message.

Microsoft’s Steve Ballmer dodges egg attack

Let’s face it – the man can move.

Microsoft CEO Steve Ballmer proved this week that his agility in the boardroom is matched by his physical agility at a podium during a lecture in Budapest.

A Hungarian student wearing a very unstylish shirt marked with “Microsoft = Corruption” found Ballmer, like Yahoo’s Jerry Yang, to be a hard man to get a read on and missed his target when he lobbed an egg.

Maybe if he had hit his target, Ballmer would have been more willing to give him the money he demanded.

Microsoft CEO, in Herzliya: Our company almost as Israeli as American

Steve Ballmer was in Herzliya, Israel to open the company’s new research and development center and brought good news for Israeli startups.

Not only is Microsoft almost an Israeli company, but the Redmond software marker is looking to acquire more startups located in Israel – a location the Microsoft CEO has likened to Silicon Valley.

I hope that while he was there, he took the time to get some advice from Shpigler, who previously advised Yahoo in is its negotiations with Microsoft.

For those not familiar with Shpigler, he suggested that Yahoo negotiate the sale of parts of its business and he clearly knows more than Citigroup analyst Mark Mahaney.