Falling further behind industry giant Google all the time, Microsoft has decided to make a leap into better competititveness by making a bid for another industry titan.

Yahoo has also been trying unsuccessfully to compete with Google which makes Microsoft's bid to buy the company a direct challenge to them:

It was Steven A. Ballmer, the chief executive of Microsoft, and his message was curt. He did not call to negotiate. Microsoft would make public a hostile $44.6 billion offer for Yahoo early Friday morning in a bold move to counter Google’s online pre-eminence.

Mr. Yang, in shock, rushed back with the news to his directors, some of whom were getting ready to leave Yahoo’s headquarters in Sunnyvale, Calif. The board meeting was no longer over; it would turn into a strategy session that stretched into the night. The message that jolted Mr. Yang also jolted the technology industry.

Yahoo, founded by two Stanford graduate students, Mr. Yang and David Filo, was once the leader of the dot-com world. But it has been dethroned in recent years by Google, itself founded by two Stanford graduate students. For its part, Microsoft has struggled to compete with Google’s ever-widening lead in search and advertising as the computer world shifts from desktop products to online software and services supported by ads.