Wall Street Journal reports that the negotiations between Web giant Yahoo Inc. and software and hardware behemoth Microsoft have been stopped.

Last week, Yahoo’s stocks surged more than 10% after the initial rumor posted in WSJ and The New York Times concerning Microsoft’s possible acquisition of Yahoo for about $50 billion. The current market value of Yahoo is estimated at around $41.77 billion, while Microsoft is valued at $292.36 billion. Following the buyout announcement, Microsoft’s stocks declined 1%.

However, Wall Street Journal, which has recently received a $5 billion offer from Australian media mogul Rupert Murdoch, has been quoted by Reuters as stating that the negotiations reached again an unfruitful ending.

This wouldn’t be the first time Microsoft and Yahoo fail to agree on a possible merger. Last year, it has been claimed that Yahoo turned down a much more tempting offer of about $80 billion from Redmond. At that time, Bill Gates was apparently not very interested in Yahoo, considering it more of a content company rather than technology company. MS planned to integrate Yahoo's strength concerning search and advertising into its MSN portal, but failed to do that after Yahoo officials considered the $80 billion offer as ...too small.

Microsoft sees the recent move as its best strategy for countering growing competition from Google, which already dominates lucrative internet search and advertising, and also has developed web-based applications that could challenge Microsoft's Windows and Office software.

If it acquires Yahoo, Microsoft would triple its share of the US search market to 38.4 per cent, rivaling Google's 48.3 per cent, according to ComScore Inc.

Google Sites led the pack with 3.5 billion search queries performed, followed by Yahoo Sites (2.0 billion), Microsoft Sites (798 million), Ask Network (379 million), and Time Warner Network (368 million).