Its the big anticlimax. Microsoft has announced that it no longer deems it worthy to pursue Yahoo. The message was made clear in a letter sent by their CEO to Jerry Yang, the CEO at Yahoo.

An excerpt from News.com

Although price was a key issue, Microsoft also had strategic concerns and saw it as unlikely to achieve a friendly integration process. According to a source close to Microsoft, Yahoo founder and CEO Jerry Yang had "unrealistic expectations."

There were many issues that Redmond would have to face with the redundancy of services and then there were the looming fears of how teams on both sides could continue to innovate on technologies in the same spheres.

Perhaps what has happened is the best that could have happened for the engineering talent at both the sides. The time it would have taken for the integration to come through would have perhaps given that much more advantage to Google on the advertising front.

Considering the kind of hyper activity that Yahoo has shown in the time since the Microsoft bid was announced - with its innumerable product announcements and promise of growth in the next two years, the coming time will be really testing for them.

But the question still remains as to whether Microsoft can make some key acquisitions to keep up with the growth of Google in the online advertisements space.