Rumors of a potential buyout have been around for years and the two companies have engaged in unofficial talks on a regular basis. Now, with Google clearly gaining ground in the advertising scene (they recently purchased DoubleClick), Microsoft has once again asked Yahoo to enter official talks concerning a potential buyout.

If Microsoft and Yahoo can agree on a price tag - current valuations put Yahoo at $50 billion - it would create quite the dominant force on the Internet. “Yahoosoft” would control 31 percent of the search traffic, a significant increase against Google’s 65 percent market share. In addition, a deal could benefit XBox owners as a wide variety of Yahoo content could then be available via XBox Live.

Microsoft asked Yahoo to enter into official talks a few months ago but Yahoo quickly turned the offers down. Analysts say Microsoft is now more willing to work with Yahoo in establishing a deal and Yahoo is in more of a bind this time. Since the launch of Yahoo’s search advertising platform Project Panama they have posted disappointing results, which could lead investors to consider the buyout more thoroughly.

Update: Yahoo’s stock has jumped almost 19 percent since the New York Post ran this article this morning, up to $33.49, as of 6:30AM PST.