I remember Microsoft very nearly bought Yahoo a few years back.
I wonder if a Microsoft - Google merger maybe on the cards.
I can't think of a reason that a merger would benefit either one. They compete on cloud, office, desktop OS, ecosystem, etc.. Google is primarily an advertising business, and Microsoft is primarily a software business. Both are moving more to the cloud, as is every other tech company. Culturally they couldn't probably be more different. Microsoft's roots are old school, IBMish; Google is a dot com. The average age of staff is I think about 12-13 years different between them, which are polar opposites in tech companies.
It is very unfortunate that Microsoft squandered the early lead they had in smartphone platforms (going back to Pocket PC, Windows Mobile, etc. and they had significant share). Ballmer failed to see the iPhone (or Android) as a threat to their business. Its an example of what happens when a company gets fat, dumb, and happy, and is riding on a hugely profitable product that is a significant share of their business... they get lazy in the other areas. Hmm... any similarities to Apple and how the iPhone has become what they are totally about. Everything else is slowly becoming a hobby or accessory for the iPhone's ecosystem.
Microsoft is never going to be able to re-enter the mobile space and compete head to head with iOS and Android. Its virtually impossible unless they wanted to fund multiple billions to pay for developers to move the top several thousand apps to that platform... and they kind of tried that before and it failed because the developers had no incentive to make them good. The "build it and they will come" mentality won't work. They need to change the playing field with a market disruption product. That is definitely possible. They have a much better shot and doing it with Android than iOS, because iOS is unwilling to allow their walled garden to be messed with. From what I can see, Microsoft is now wanting to be the "glue" company to help these things work better together. To what degree they get cooperation from their competitors remains to be seen.