Microsoft has offered to buy the search engine company Yahoo for £22.4bn ($44.6bn) in cash and shares.

The offer, contained in a letter to Yahoo’s board, is 62% above Yahoo’s closing share price on Thursday. Yahoo cut its revenue forecasts earlier this week and said it would have to spend an additional $300m this year trying to revive the company. It has been struggling in recent years to compete with Google, which has also been a competitor to Microsoft.

“This consolidates the marketplace down to Google versus Microsoft. These two companies will be going head to head.”

In the search industry, this is hardly a surprise. But even combining referrals from Yahoo and Microsoft, they are still virtually insignificant compared to the amount of traffic sent to most websites by Google. It was just a matter of time before Microsoft took this action, but this alone won’t be the answer to challenge the dominance of Google as the number 1 search engine, no matter how much many would like it to.

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