Yahoo! Deal: All the Wrong Bidders

NEW YORK ( TheStreet) -- New rumors are emerging every day about potential suitors for Yahoo! ( YHOO).

Yet none of the reported bidders seem to make much sense.

Here's a roundup of the strategic buyers allegedly looking at Yahoo!, their rationale and why these proposed deals don't really pass muster.

Google

Google ( GOOG) is reportedly speaking with private equity firms to help finance a deal to purchase Yahoo's core business, according to the Wall Street Journal.

Why It's Involved: Google is likely looking for an opportunity to sell ads on Yahoo's highly trafficked websites like Yahoo! Finance and Sports. It also sees a new audience for its social networking site, Google Plus.

In addition, Google could use its advertising technology expertise (aka DoubleClick) to help Yahoo! more efficiently sell display ads.

Yahoo!'s display ad unit, which comprises video and interactive ads, has long been considered one of its most valuable assets, accounting for around half of its revenue. But the company has seen growth slow in this business recently, despite an industry-wide uptick.

Why It's a Bad Call: Any deal involving Google would surely attract antitrust regulators. The company is already being investigated by regulators in both the U.S. and Europe over concerns its search business thwarts competitors.

In 2008, the Department of Justice blocked a potential advertising partnership between Google and Yahoo, arguing it would limit competition and raise prices across the online ad market.

Microsoft

Microsoft ( MSFT) is reportedly taking another look at Yahoo! after trying to buy the company in 2008 for $44 billion.

Why It's Involved: Microsoft already has deep ties with Yahoo! through a search partnership in which the company's Bing search engine powers queries made by Yahoo! users.

Microsoft would likely be involved in acquisition talks to protect its interest in the search partnership -- if another company purchased Yahoo!, the fate of its search deal would be up in the air.

Buying Yahoo! might also reinvigorate investor interest in Microsoft. The company's stock hasn't moved much in the last several years and the company risks falling behind to fast-growing companies like Facebook and Apple ( AAPL).

Why It's a Bad Call: Buying Yahoo! is a questionable way to make Microsoft more relevant. Besides, the company's current focus is on improving its mobile strategy and a large-scale acquisition might prove to be little more than an expensive distraction.

Alibaba

Alibaba CEO Jack Ma has said he is "very interested" in buying Yahoo!

Why It's Involved: Alibaba and Yahoo! are already intertwined. In 2005, Yahoo! paid $1 billion for 40% of the Chinese e-commerce company.

Much has changed since then -- Alibaba has become one of the world's largest Internet businesses, while Yahoo! is struggling.

Alibaba may be looking at Yahoo! to strengthen its presence in the U.S. market, as its rivals like Baidu ( BIDU) and Tencent have started to do.

Why It's a Bad Call:

A deal between Yahoo! and Alibaba would likely turn into a privacy and security headache. It also raises the question if Yahoo! users would want to host their e-mail on a Chinese site for fear of censorship.

All Internet companies with a presence in China must face their sites being blocked or censored if the information is deemed harmful. Google pulled out of mainland China in 2010 after concerns about online freedom.

-- Written by Olivia Oran in New York.

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