Microsoft Withdraws Offer to Buy Yahoo; Buys Three Smaller Companies Instead

Unconfirmed sources report that Microsoft has decided not to buy web giant Yahoo. Microsoft has instead decided to purchase three smaller companies that are a better fit with its core software business. Microsoft will be buying, Malware, Inc and The purchases are not expected to require any regulatory approval.

The move signals a major change in direction for Microsoft away from becoming a content and ad serving company. Microsoft managers have apparently decided to refocus on their core software business.

“The purchase of is a not a surprise to me.” Says industry watcher Sloat Fullerton. “ is a contract programming shop that has worked on many software projects for Microsoft in the past. This is just bringing them into the mother ship, maybe they were going to do so much work on Windows 7 it was decided to just buy them to save money down the road.”

The purchases of Malware, Inc and could signal a new round in the battle for the desktop. With Microsoft nearing the end of its court supervision these two new units could bring Microsoft back onto the desktops on new computers in force. The two companies are known for making common desktop applications, but with Microsoft’s distribution muscle their products will spread deeper into the Microsoft ecosystem and perhaps into the mobile computer and smart phone markets.

The share prices of all the companies involved, including Yahoo, have risen with the news.