By Daisuke Wakabayashi - Analysis

Feb 27, Reuters

SEATTLE - Neither Microsoft Corp nor Yahoo Inc wants to blink first in the software giant's proposed $41.7 billion takeover of the Web pioneer but as the gamesmanship drags on, archrival Google Inc, the merger's raison d'etre, is the biggest beneficiary.

Not much has progressed since Microsoft offered to buy Yahoo on February 1, a proposal that was rebuffed by Yahoo's board as undervaluing the company. Microsoft has countered by saying its offer was fair and urged the board to take a second look.

The union of its two biggest Web rivals could eventually loosen Google's grip on online search and advertising, but a messy takeover battle followed by a complicated integration could give Google ample time to build on its advantage.

"Google benefits if Yahoo is in a state of limbo," said RBC Capital analyst Jordan Rohan. "The longer the uncertainty persists, the greater lead Google has in online advertising."

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