An interesting battle is going on between the world’s major search engines…

You might have noticed that Google dominates online search, but Microsoft has a plan to knock Google from its top spot as Internet search leader. While analysts believe Yahoo will do everything in its power to remain independent, Microsoft is strongly encouraging Yahoo to accept a takeover bid of nearly US$42 billion.

Google controls around 62% of the lucrative global search market and has been strengthening its grip even further in recent times. In comparison, Microsoft and Yahoo combined have just a 16% share in worldwide search. And the sting for Yahoo? They gave Google its first big break in 2000, hiring the G-team to run their search engine.

Following the news, Yahoo shares rose nearly 48% while Microsoft shares fell 6.6% - signaling the stock market’s scepticism over the benefits of a union between the two giants. Google shares fell 8.6% on Friday, but this was in response to a disappointing fourth quarter earnings report, rather than a reaction to news of Microsoft’s bid for online supremacy.

So, what’s in it for Microsoft? The software giant may still the most valuable tech company in the world, but to solidify its position for the future it will need to gain a more level footing in the online world - as the computer user experience becomes increasingly Web based and less software reliant.

After turning down at takeover offer last year, Yahoo faces pressure to accept the latest bid, or risk a continuation of sliding profits and a bleak outlook for 2008.