Major IT companies in the U.S. are forming new alliances. The companies have been diversifying their operations and expanding into new areas of business, while building a unified front to take on Google, the leading online search portal. Yahoo, once the reigning champion of Internet search until it was unseated by Google, has joined hands with Microsoft in a bid to challenge Google, the Associated Press reported on Wednesday. Meanwhile, the Financial Times reports that Apple has rejected an iPhone application developed by Google, signaling the end of a corporate honeymoon the two had been enjoying.

The alliance between Yahoo and Microsoft is the result of a long courtship by the Redmond, Washington-based software giant. Last year, Microsoft was denied a bid US$47.5 billion to buy Yahoo. According to media reports, the deal will see Yahoo's search results powered by Microsoft's new Bing search engine. Yahoo will handle online ad sales and customer relations, while using Microsoft's Ad Center technology, which sets prices for search-based ads through an automated auction process. Ad revenue will likely be shared between the companies.

Google currently controls 67 percent of the global market and 65 percent of the U.S. market for Internet search. Second-ranked Yahoo trails with just eight-percent of the global market and 20 percent of the U.S market. Microsoft, the world leader in computer software, introduced the highly-capable Bing in June, but so far its share of the global market is just three percent and of the U.S. market just 8.4 percent. Google seems an impenetrable fortress in the search field.

Everything has been downhill for Yahoo since Google came on the scene. In 2004, Yahoo expanded the storage capacity of its free e-mail service and even offered instant messaging services with Microsoft in order to counter Google's Gmail email service, but was unable to maintain its market dominance. Microsoft has also been challenged by Google. Diverging from its focus on search, Google in 2006 introduced Google Docs, a free online suite of office software, signaling the start of a major assault against Microsoft. CNN Money reported on Monday that the battle between the two IT giants has grown even hotter with the introduction of Google's Chrome Internet browser to challenge Microsoft's Internet Explorer and Chrome OS to take on the Windows 7 operating system.

Meanwhile, the close relationship between Google and Apple, especially in the area of mobile content, appears to be souring with Apple rejecting Google's Voice and Latitude applications for the iPhone. Google Voice enables users to make cheap phone calls over the Internet, while Google Latitude allows users to broadcast their location and see where their friends are. The New York Times reported on Wednesday, "Eric E. Schmidt, [Google's] chief executive, sits on Apple's board. But Google's Android operating system, which has not yet been widely adopted by cellphone makers, could one day threaten the iPhone."