Jerry Yang may have beaten back a near-hostile takeover bid from rival Microsoft, but now he will have to face the music in the form of activist investor Carl Icahn, who today launched his own proxy bid for control of the company.
Just days after Microsoft backed away from its offer to buy Yahoo, rumors began circulating that Yang, who many had come to view as an irrationally stubborn obstacle to the takeover, was on the brink of losing control of the company he co-founded in 1994 with fellow Stanford graduate student David Filo.
Icahn, who is known as a hard-nosed investor, recently amassed a stake in Yahoo. In an open letter to the Yahoo board, Icahn disputed Yang's claim that Yahoo would be better off without Microsoft.
"I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with [Google]," Icahn wrote.
Icahn and his proposed slate of directors -- a group that includes the likes of Mark Cuban and New Line Cinema founder Robert Shaye -- hope to restart talks with Microsoft after ousting Yang and gaining control of Yahoo. But so far, Microsoft, which previously said it would go it alone, hasn't commented on the news.
Meanwhile, Google continues to outpace both Microsoft and Yahoo. Yesterday, news broke that Google's search business would soon eclipse Microsoft's Window's business.
One remnant of the Microhoo soap opera that may still be in play this time around as Icahn makes his pitch for Yahoo could be Yang's desire to work with Google. In a controversial experiment, Yahoo toyed with the idea of letting Google sell ads against its search traffic. That experiment proved that Yahoo could make more money by outsourcing that portion of its business to Google, and many believe the trial helped push Microsoft away from the deal. In the wake of Microsoft's decision to quit the Yahoo talks, many thought Google might walk away as well, but the search leader said it hoped to make such a deal permanent.
Whether Google can save Yang and Yahoo from internal strife remains unclear.