Murdoch's Yahoo move gives Microsoft pause

Microsoft was deciding last night whether to raise its offer for Yahoo or walk away and use its cash to buy a number of web 2.0 companies after learning of Rupert Murdoch's interest in the online search and content company.

There was intense speculation on Wall Street yesterday that Microsoft could start any shopping spree with an approach to Facebook, the social networking site in which Microsoft bought a tiny stake for $240m (£120m) in October. That deal placed a valuation of $15bn on a site that Mark Zuckerberg created in his room at Harvard four years ago.