Back to February 1st, Microsoft offered $44.6 billion ($31 per share) to acquire all Yahoo’s outstanding shares, and Yahoo rejected it. Since then Yahoo’s share price has dropped to $9 per share over 9 months time, and Jerry Yang, Yahoo ex-CEO had to step down when facing intense pressure from shareholders. Later on, in November, Microsoft made a proposal to acquire Yahoo’s online search business for $20 billion.

Today, Microsoft is hiring former Yahoo VP engineering Qi Lu as President of Microsoft online services group. Lu was at Yahoo for 10 years, most recently served as executive vice president of engineering for all of Yahoo’s search and advertising development efforts. Before Yahoo, Lu was at the IBM Almaden Research Center.

There is no doubt that Microsoft needs Yahoo to rescue their online services arm as they are slipping behind Google in the online advertising market, which is worth $25 billion and growing. Google has a market share of 78.2% compared with Yahoo’s 17% and Microsoft’s 6%. Microsoft is desperate to change the current situation, and after unsuccessful attempt to acquire Yahoo, Microsoft is now trying to get Yahoo’s tech stars, who built the Yahoo empire, and they believe that the most valuable assets of software companies are their talented people.