Joost and Joltid filed a motion for preliminary injunction against former Joost CEO Michelangelo Volpi and Index Ventures, where Volpi now works as a partner, asking that he not use knowledge or confidential information he got at the video start-up in current dealings with Skype.

The move is yet another legal attack from the founders of Skype, who were on the losing side of the $2 billion deal to buy the Internet telephony giant from eBay (EBAY).

Opening the “Memorandum of Points and Authorities in Support of Plaintiff’s Motion for Preliminary Injunction,” which is shown below and is full of tough allegations about Volpi’s misbehavior:

“This action arises out of the acts of a faithless fiduciary, defendant Michelangelo Volpi, who, despite being the chief executive and Chairman of Joost, embarked on a systematic scheme to breach his fiduciary duties and promote his own self-aggrandizing campaign to become the next chairman of internet telephony leader Skype Inc.”

Volpi, who declined comment for now, was CEO of Joost, arriving at the much-hyped online video start-up to great fanfare in mid-2007.

But the London-based Joost never quite caught fire and began layoffs and contraction this summer.

As part of that development, Volpi then went to Index Ventures, a venture firm also based in London.

And, in one of Volpi’s first deals, Index was one of the smaller players on the winning side of the bid to buy Skype, putting up $75 million.

But also vying for the prize were the Internet telephony service’s founders, Niklas Zennström and Janus Friis, who had hooked up with a group of private equity investors.

To complicate things further, the innovative and entrepreneurial pair also own a company called Joltid, which has licensed key technology for Skype to eBay.

Joltid and eBay have been fighting in court over that agreement, bickering back and forth about whether eBay violated the terms of that deal or not.

Via Joltid, Zennström and Friis also filed suit again against Skype and its owner, eBay, for copyright violations in the U.S.

For good measure, they also added the winning buyout group, including Index, Silver Lake Partners, Andreessen Horowitz and the Canada Pension Plan Investment Board.

And both Joltid and Joost–aka Zennström and Friis–also sued Volpi personally, as well as Index again.

They allege tech skullduggery on Volpi’s part, in which he used confidential information he learned at Joost to thwart Joltid.

UPDATE: Here is the press release, with the official filing below:

Joost and Joltid File Motion for Preliminary Injunction Against Michelangelo Volpi

And Index Ventures Management, Seeking to Prevent Their Use of Confidential Information In Connection With the Acquisition or Management of Skype

Wilmington, DE (Oct. 14, 2009)–Joost US, Inc., its indirect parent company Joost N.V., and Joltid Limited today filed a Motion for Preliminary Injunction against Michelangelo Volpi and Index Ventures Management in the United States District Court for the District of Delaware. In support of the Motion, the plaintiffs also filed a Memorandum of Points and Authorities containing facts and legal arguments, witness declarations and other evidence.

The Motion for Preliminary Injunction asks the Court to enjoin Index and Volpi from using any of Joost’s and Joltid’s confidential information regarding (among other things) the Global Index Software, the technology developed and owned by Joltid that provides the peer-to-peer capability embedded in the Skype program. The Motion also asks the Court to enjoin the defendants from: (i) using the confidential information in connection with the operation or strategic planning of Skype; (ii) communicating such information to other parties in the “Buyout Group” that has made a bid to acquire Skype from eBay Inc.; (iii) soliciting employees of Joost and Joltid with offers to join Skype; (iv) having communications with current or former employees of Joost or Joltid regarding the companies’ confidential information; and (v) further participating in the Skype acquisition or assuming any position with Skype until a final adjudication of the merits of the case.

The Motion for Preliminary Injunction, Memorandum of Points and Authorities, and supporting declarations are available on the internet at https://www.lexisnexis.com/fileandserve. The case name is Joost US Inc. et al v. Volpi et al and the Case Number is 1:09-cv-708.

The plaintiffs filed a lawsuit against the defendants on September 18, 2009, alleging breach of fiduciary duty against Volpi, aiding and abetting breach of fiduciary duty against Index, interference with prospective business advantage, misappropriation of trade secrets, breach of contract against Index, breach of confidence, and civil conspiracy. The Motion for Preliminary Injunction seeks interim relief until the lawsuit can be completed.

And here is the key filing, one of 10 in the case:

PI Brief – PUBLIC –

BoomTown just got the following email from Anne Wojcicki, co-founder of 23andMe, the personal genetics start-up, about the departure of her co-founder, Linda Avey (pictured here). She will be starting a foundation related to Alzheimer’s disease.

The pair founded the high-profile company–whose Series A investors include Genentech (DNA), Google (GOOG) and New Enterprise Associates, as well as Wojcicki’s husband, Google co-founder Sergey Brin–in 2006.

It has collected almost $23 million in funding.

Avey noted in an email to staff, which is posted in its entirety below: “I also recognize that the company has reached a critical point in its growth where new leadership can take it to the successful heights we all think it can achieve.”

Wojcicki’s email reads, in part:

I wanted to let you know that Linda Avey will be leaving 23andMe to focus her energy on transforming Alzheimer’s research and treatment, leveraging the 23andMe platform. Linda and I have talked about doing research in Alzheimer’s since the inception of the company. Linda, whose father-in-law recently died from the disorder, will be leveraging 23andMe’s platform as she works to revolutionize the research, treatments and prevention for Alzheimer’s.

Linda will be greatly missed by me and my colleagues but we’re glad she will continue to be in a related field, and we are committed to continuing the work that she and I started three years ago.

And here is the email from Avey to the staff, as well as Wojcicki’s below it and then the official press release:

Dear all-

As I trust you all know, 23andMe is very special to me. I also recognize that the company has reached a critical point in its growth where new leadership can take it to the successful heights we all think it can achieve.

I’ve decided that I’d like to focus my efforts on an area that is personally significant and will continue to have a huge impact on our healthcare system–Alzheimer’s disease. Effective today, I’m leaving 23andMe and have begun making plans for the creation of a foundation dedicated to the study of this disorder. The foundation will leverage the research platform we’ve built at 23andMe–the goal is to drive the formation of the world’s largest community of individuals with a family history of Alzheimer’s, empower them with their genetic information and track their brain health using state-of-the-art tools. We’ve always planned to include Alzheimer’s in our 23andWe research mission…I’m just approaching it from a new angle.

Some of you might be aware that my father-in-law suffered from Alzheimer’s and passed away last year. For this reason, Randy and I are motivated to do what we can to improve the understanding of what leads to the debilitating symptoms and what might prevent them from starting in the first place. The ApoE4 association is barely understood but gives us a great starting point.

I’ll miss working with you but will be excited to hear about the progress I know you’ll be making!

All the best,
Linda

Team:

As Linda has told you, she will be leaving 23andMe to focus her energy on transforming Alzheimer’s research and treatment, leveraging the 23andMe platform. While I am quite sad to see her leave I am excited and hopeful as she takes on this mission. As Linda’s co-founder and partner over the last three years, it has been clear that revolutionizing research has been a primary passion. Our drive to change health care has always had roots in our personal lives and we have tried to structure 23andMe so that any individual or organization could actively participate in research. Linda and I have talked about doing research in Alzheimer’s since the inception of the company and the need for the Alzheimer’s community to have a strong leader. With Linda’s involvement, I believe that the APOE4 community could be the first asymptomatic community to successfully develop preventative treatments. I hope that going forward we’ll both be able to shake up and transform the health care space, making health care and treatments better for all.

Linda’s departure is also a sign of 23andMe’s maturation. When we started the company, the personal genetics industry did not exist; now it is a thriving and competitive landscape. Our company has grown and we continue to be an innovative industry leader. While our success has been exceptional, it is also clear we have a lot of work ahead. We have created a significant and empowering tool, but we must find new and better ways to promote the value of knowing your DNA. In the weeks ahead, we will outline a strategy for the company that we believe will make genetics a routine part of health care and will lead us to making significant research discoveries.

Linda has been instrumental in making 23andMe what it is today and we thank her for her passion and dedication to the company. We have many exciting opportunities before us, and I look forward to working with all of you to make 23andMe a spectacular success.

Anne

Linda Avey to Create Alzheimer’s Foundation

Mountain View, CA–September 4, 2009–Linda Avey, co-founder of 23andMe, an industry leader in personal genetics, announced today that she is leaving the company to start a new foundation focused on Alzheimer’s disease. Ms. Avey’s foundation will leverage the 23andMe research platform to search for causes and treatments for the disease, which afflicts more than 5.2 million people in the United States.

Ms. Avey and Anne Wojcicki founded 23andMe together in 2006. The company provides personalized genetic information through DNA analysis and allows individuals to interact with their private information through a variety of web-based tools.

“I could not be more proud of what we have accomplished in the three years since Anne and I created 23andMe, and I am excited to take the next step in applying my experiences to one of the great health challenges of our time,” said Ms. Avey, who has more than 20 years of experience in the biopharmaceutical industry. “There is a clear need for revolutionary research and concentrated effort to confront Alzheimer’s, and we need to start now in order to make meaningful progress. The resources are out there–my goal is to marshal them to find answers for families, like mine, who have lost family members to such a debilitating disease.”

Concurrent with Ms. Avey’s announcement, Ms. Wojcicki said that 23andMe expects to make its genetic data platform available to Ms. Avey’s foundation in order to advance its research.

“Linda has been a true partner with me over these last three years, an innovative leader for our company and our industry, and instrumental in making 23andMe what it is today,” said Wojcicki. “It is only fitting that she will be making full use of our work together and leveraging the 23andMe platform for a tremendous cause. We look forward to joining her as a partner in her efforts.”

Ms. Avey’s departure announced today takes effect immediately.

Here is a video, in two parts, of Avey and Wojcicki demoing some new features of 23andMe at the sixth D: All Things Digital conference in 2008.

In the first one, they introduce 23andMe, explain the main service and ask News Corp. (NWS) head Rupert Murdoch, Walt and me about our tolerance for milk and about our racing abilities. (Full disclosure: News Corp. is the owner of Dow Jones and this Web site.)

In the second one, Avey and Wojcicki survey Murdoch on his genetic traits and show me what genes my kids have in common (and discover that I am not hyperactive).

Here are the D6 demos:

A report in the Times of London in which Microsoft would buy Yahoo’s search business in a convoluted $20 billion deal that would include well-known Internet execs Jon Miller and Ross Levinsohn, is–in the words of one key player–”total fiction.”

Actually, that’s Levinsohn speaking, on the record. But that’s also the essential word from all key players regarding the Times’s report.

BoomTown has spoken to top sources at Yahoo (YHOO) and Microsoft (MSFT) too and all scoff at such a deal now taking place or that either side has been in any such discussions of late.

Yahoo’s entire market cap, in fact, is only $16 billion.

Rumors of Microsoft buying all of Yahoo have popped up regularly since it abandoned its failed takeover bid, all of which have been untrue.

That’s not to say there will not be some search deal between Yahoo and Microsoft, which seems more than likely at some point.

It makes sense on many levels and is supported by Carl Icahn, the Yahoo board member who upped his money-losing stake in the company last week.

That stock purchase should be enough of a reason for there to be no Microsoft-Yahoo search deal imminent, given Icahn would be more than well aware of it and buying up almost seven million Yahoo shares–now at historic lows–only days ago would smack of insider trading.

Still, the report in the Times has an unusual level of detail, involving Microsoft giving large gobs of money to Levinsohn and Miller.

Wrote the Times:

Under the terms of the proposed transaction, Microsoft would provide a $5 billion facility to the Miller and Levinsohn management team. The duo would raise an additional $5 billion from external investors.

This cash would be used to buy convertible preference shares and warrants which would give it a holding in excess of 30% of Yahoo.

The external investors would also have the right to appoint three of Yahoo’s 11 board directors. The talks with Yahoo involve Microsoft obtaining a 10-year operating agreement to manage the search business. It would also receive a two-year call option to buy the search business for $20 billion. That would leave Yahoo to run its own e-mail, messaging, and content services.”

Sounds good, except it’s the first time Levinsohn has heard of the plan, he said. Sources at Microsoft and Yahoo also said there was no deal like that in the making at this point in time.

Earlier this year, there was also another deal involving Icahn, before he gave up his proxy fight against Yahoo in exchange for a board seat, which did involve Levinsohn and Miller taking over Yahoo.

But, as has happened to many schemes involving Yahoo, it never came to pass.

Interestingly, there was also a similar investment deal as the one described in the Times, many months ago, just after Microsoft had walked away from its takeover battle for Yahoo.

It involved a very complex transaction involving Microsoft buying a large stake in Yahoo shares, running Yahoo’s search business for a time period and giving Yahoo a huge guaranteed revenue stream.

But that deal had already been spurned by Yahoo for the search-ad deal with Google (GOOG), which collapsed recently under intense regulatory scrutiny.

That has focused a lot of attention back on a possible deal between Yahoo and Microsoft, the No. 2 and No. 3 players in search, both of which have been chasing Google without any success.

Microsoft, despite spending billions, has been lagging badly behind Yahoo, which has more than doubled its share.

And that is precisely why it has long been interested in acquiring Yahoo’s search business.

Microsoft CEO Steve Ballmer has said the software giant is not interested in buying Yahoo many, many times, although he has not ruled out a search deal of some sort.

But Microsoft, many sources said, has been waiting for Yahoo to get another CEO in place, after Yahoo CEO Jerry Yang recently said he was stepping down to make way for a new leader.

Yahoo has also said in recent days that it is not currently engaged in any kind of talks with Microsoft, even about a more likely search deal.

At least in this chapter of the drama that has engulfed Yahoo over the last year, believe them.

[Full disclosure, though run separately, The Times of London is owned by News Corp. which also owns this Web site.]

Maybe it would be easier to sell Facebook to Microsoft for billions and billions, even though it is not likely you will.

But, for the sake of argument, let’s take the opposing position about the best future for the hot social-networking site.

In other words, make a friendly Microsoft takeover of Facebook your own version of an IPO, as John Furrier has suggested here, and walk away a Silicon Valley legend.

Because such a sale to Microsoft could happen, you know, with or even without you.

Here’s one scenario to think about while on your current worldwide “Vision Quest” trip:

Microsoft (MSFT) somehow screws up its courage again after the Yahoo (YHOO) rejection and makes a concrete offer anywhere above $10 billion for Facebook. And it gets on the record, as it must, at your next board meeting.

Say you refuse, as you have the power to do (and have done before) as founder, due to the voting structure.

But minority shareholders find out (they always do), then some employees and, inevitably, the press.

Mayhem will surely ensue.

Sure, they all stuck with you when you turned down previous offers for Facebook at more than $1 billion from Yahoo, $5 billion from Microsoft, sniffs in that range from Google (GOOG).

That was definitely gutsy for you to do, in your first job and in your early 20s.

But $10 billion, when you have not yet proven you have a truly sustainable and explosive business model of the kind Google luckily found before its IPO?

And what if the Microsoft offer was $15 billion? $20 billion?

BoomTown will tell you exactly what:

Possible lawsuits–ask any good corporate governance lawyer about it–from any number of aggrieved minority investors for not grabbing the Willy Wonka-esque golden ticket when it was offered to you.

Growing pressure from the media–which you are, to be certain, very good at completely ignoring–asking incessantly whether you have just made too big a bet this time.

And, most importantly, from your own employees, the growing worry that even you, especially in a weak economy, cannot spin up a shinier IPO than the money Microsoft is offering you. Stayers can turn into sellers very quickly.

You need to be prepared, BoomTown speculates, for this very possibility and need to have answers when and if the time comes.

That requires asking some questions, which I am guessing a smart young man like you is already asking of yourself.

Such as: At what price should I consider a Microsoft buyout? Could Facebook still be run independently? And, if not, how long would I have to stay at a Microsoft-owned Facebook?

Most importantly, how many other entrepreneurs like me have refused the big buyout and done better?

(The list is long and varied–some like Google’s Larry Page and Sergey Brin refused and won, but others like former Netscaper Marc Andreessen did not and also did just fine.)

You’re lucky for now, of course, because Microsoft’s CEO Steve Ballmer will likely not make a definitive offer after the Yahoo debacle, without knowing you are firmly on board to at least consider it with a friendly frame of mind.

And, I am guessing, you won’t dangle a price to Microsoft either.

Thus, a chicken and an egg conundrum. Which comes first?

BoomTown is also guessing the bankers are working hard at solving this ancient philosophical causality dilemma–in this case, who can and should move first?

But no matter how much they huff and puff–expensively, of course–the only one who can solve this puzzle is you, at least at this juncture.

And that requires just one basic question for which you need to have an answer ready: Do you truly believe you can do better?

Well, do you?

Furrier thinks not: “Risk losing it all in competitive warfare where you’re undermatched and overgunned. … It’s about basic risk management.”

Of course, all BoomTown can offer to say is this: There is absolutely nothing basic about it.

And, for your viewing pleasure, there is also nothing basic about this delightful man lip-synching to the classic movie “Willy Wonka & the Chocolate Factory” ditty, “I’ve Got a Golden Ticket” (along with the real clip from movie below it):

Off with the Yahoo CEO’s head!

OK, maybe not so much, at least today.

Indeed, according to many sources, Jerry Yang’s head still sits squarely on his neck.

And, moreover, his job as CEO has not been usurped by Yahoo (YHOO) Chairman Roy Bostock, who was allegedly–as one rumor went–authorized by Yahoo’s board, instead of Yang, to restart negotiations with Microsoft (MSFT).

(Which is kind of obvious when you actually think about it, given that Bostock is mired in this takeover collapse mess up to his own at-risk neck along with Yang. Bostock has been deeply involved all along and will likely continue to be.)

Thus, lots of smoke and little fire, contrary to rumor-based reports, like this one from TechCrunch–most of which seem to hang on the thinnest of threads (Where in the world is Yahoo board member Eric Hippeau?).

More importantly, even though they move share price, these rumors show almost no knowledge of how public company boards actually operate, which is to say with slug-like speed, even when under fire as Yahoo clearly is.

And if Yang were to go, I would guess it would be under his own steam or he’d be run out with Yahoo’s directors on a rail by angry shareholders.

Still, as a post yesterday of BoomTown’s book excerpt on the AOL Time Warner (TWX) debacle illustrates, even shoving aside a much-pilloried exec like former Chairman Steve Case, who presided over the merger disaster of all time, it took months and months and months and months and finally came well after the wheels fell off the bus there in a move made by Case and not his detractors.

And such a move to denude Yang, in the midst of the most trying time for the company, would make Yahoo’s board seem like particularly thickheaded morons–backing Yang strongly one day and throwing him overboard the next.

That is not to say Yang has not lost a mountain of credibility with Wall Street, investors, his own employees and in the industry in general, over the way he has handled the situation with Microsoft. The fallout from the debacle has damaged him badly.

The reviews are in and it is pretty much one million angry thumbs down.

Unfortunately, Yahoo’s leadership team has not exactly distinguished itself in the aftermath with their public statements, whether it be Bostock’s fanciful musings that Yahoo had the support of shareholders or President Sue Decker’s ungracious dissing of disgruntled Yahoo employees or pretty much the bulk of the backpedaling Yang has done.

And I don’t even know what to say about the excuse about the $33 offer not being written down as a problem by Yahoo execs, which makes them all move a little closer to Nearly Headless Nick in “Harry Potter,” in my estimation.

I do get their fervent need to explain themselves, especially in the face of such ferocious criticism.

But it has been so cringe-inducing to watch, that part of me wishes they would slink back into that cave Yang and his team have been living in all year long.

Obviously, Yang cannot and must now take the heat and find a way to clearly articulate a really good vision of what lies ahead for Yahoo.

That does not mean dangling the possibility of another deal with Microsoft to placate critics or pretending Yahoo wanted such a merger.

The very fact that Yang brought the painfully terse Yahoo Co-Founder and tech guru David Filo–who has fervently opposed a lot of Yahoo hookups in the past, like with eBay (EBAY) many years ago–with him to the key meeting last weekend with Microsoft CEO Steve Ballmer was all I needed to know to determine that the company did not want to sell.

So, Yang and the board got what they wanted–for now, at least–which is a very painful dose of independence.

If they want that to mean going back to talk with Microsoft, Yahoo should stop playing games and do so with a minimal amount of jockeying.

If it means making a series of bold moves to focus and define its business, then Yahoo should do that and quickly.

And if Yang can’t lead or is still lonely–he said last year of the CEO job, “It is a lonely job in the sense that you have to make some of the tough calls”–he needs to step aside for a new leader of Yahoo.

Because, even if Yang lives to fight another day, this much is clear: The clock is running down for him and his stewardship of Yahoo.

Yang is, as Dean Vernon Wormer of “Animal House” said so eloquently, on double secret probation.

So, if I were to predict, I would say six months without meaningful change is all he has.

And after that, I would imagine, is when the blade really starts really falling.

After dissident shareholders, led by Jana Partners, landed one right in the kisser to the board and management of CNET Networks yesterday–releasing a 38-page report that essentially called the company’s leadership incompetent, the tech news and review site gave the literary effort a kiss-off of its own.

First, rather politely, CNET said that Jana’s proposed strategies, which called for a major overhaul of all aspects of CNET’s operation, “will be carefully reviewed. To the extent there are any new strategies that would create stockholder value, they will be implemented.”

But wait for it!

The statement continued: “CNET Networks added that while it welcomes the views of its stockholders, after a preliminary review, the white paper contains numerous misstatements and is misleading in many respects. The Company will respond in due course.”

BoomTown looks forward to that response, especially since the Jana group pulled no punches in its initial parry, writing in the report:

“The current leadership of CNET Networks Inc. (”CNET” or the “Company”) has presided over massive value destruction…CNET’s current leadership now claims it can reverse course and begin creating shareholder value, but we believe they have offered no evidence that they can do so. Despite years of shareholder value destruction, CNET’s leadership during this time failed to act on the urgent need to make fundamental strategic and operational change, instead pursuing a failed expansion strategy even as CNET fell further behind…In addition, we believe CNET’s Board and senior management lack the industry-specific experience and expertise to stop this shareholder value destruction.”

And did they mention “value destruction”?

So, I was making the rounds again of my sources at Yahoo’s major institutional investors yesterday and here’s the overall 411: Frustration. Confusion. Impatience.

And the bottom line from several of them–if Yahoo does not wise up and start seriously kibitzing with Microsoft over its takeover bid sooner than later, than some investors have signaled to the company’s top execs that they would likely back Microsoft if a proxy fight came to pass.

I really don’t think such a battle should happen, of course, as such a fight seems like it would only benefit the party that the pair should be concentrating on fighting: Google.

But it is interesting that such disgruntlement is coming from institutional investors, who are usually exceedingly and excessively polite to the brass in companies they hold stakes in.

In fact, Yahoo execs are probably about to get a more painful earful from other kinds of Yahoo investors–specifically, arbitrageurs, fast-moving risk investors who try to to profit from share price inefficiencies in the market and who also hold big stakes in both Yahoo and Microsoft.

According to sources close to the situation on both sides, this week Yahoo execs, such as President Sue Decker, will be checking in with major arb investors–much as they did with institutional ones recently–to talk turkey.

And given arbs are not known for their diplomatic nature (let’s be honest, they are essentially the Olympic hecklers of Wall Street), I would imagine they will roast that turkey if they feel Yahoo is lollygagging and costing them bucks.

Whatever the message Yahoo gets, what was also interesting from my conversations with investors is that, although there is significant overlap in major investors of both Microsoft and Yahoo, several continue to indicate that they would not mind if Microsoft upped its bid a little bit to assuage Yahoo.

While some note it is probably unnecessary–even though the $31 a share offer is now actually worth $28.99 (according to Silicon Alley Insider’s magical Microsoft-Yahoo Bid Calculator, courtesy of Henry Blodget) because of the drop in Microsoft’s share price–some investors think such a move might be a coup de grace about now.

Why? Well, because some investors think it’s just time in this increasingly cloddish pas de deux, as it is clear there are few moves left to Yahoo, except to extract a better price from Microsoft.

They note that unsolicited takeover fights typically take about four months to run their course. We are now moving into month three now and not a lot has changed.

Of course, BoomTown has argued that there is no good reason that Microsoft should up its bid–after all, why bid against yourself, given the weakness of Yahoo alternatives, as I posited here?

As I wrote last week:

I was a bit perplexed at why Microsoft would top its own bid and raise its $31-per-share offer for Yahoo to $34 a share, as suggested by Citigroup analyst Mark Mahaney yesterday.

There seem to be no other rivals and not much has changed since the software giant made its unsolicited offer at the start of February, except for time passing.

Of course, the only reason to do so then is to get the deal done sooner than later and perhaps the number was a public message to Microsoft CEO Steve Ballmer of that fact (as I said before, I am sure there are plenty of private messages too).

And while I am in the camp that Yahoo, well run, is probably worth a whole lot more than even $34–although perhaps not the $40 that Yahoo claimed last week–it’s still a matter of actually getting Microsoft to pay it by bidding against itself.

(BoomTown reiterated its contention that Microsoft does not want to up its bid last night here and the Wall Street Journal wrote a piece today weighing in on the not-bidding-against-ourselves idea.)

Still, some investors think Microsoft might get quicker results if it did so.

And since Yahoo and Microsoft share a very similar slates of investors, there is really not much money actually being wasted, they argue–a kind of out-of-one-pocket-into-another thing for many investors, which is why they are probably advocating it.

So, it might not be such a bad idea to grease the wheels, said one investor: “This all could have been done at the start of this whole thing, but if it means a resolution, then that’s the most logical thing to do.”

As if logic has anything to do with it!

In fact, the real issue is probably emotion, or as one person I talked to close to the situation called it: “Founderitis.”

In other words, the emotional connection to the fate of the company is stronger than the current reality for people like Co-Founder and CEO Jerry Yang.

I am not sure that is exactly true, given Yang has always been perhaps the most ethical and steadfast of the Internet entrepreneurs I have ever met (and I have met them all).

In his heart, I believe he truly thinks he is doing what is right for shareholders, customers and employees.

But in further dragging out the time clock–which is apparently a classic defense move in the M&A game and was probably the right tactic for Yahoo initially–Yang risks more trouble, such as perhaps a letter urging a deal from major investors that gets made public, for example.

In addition, Microsoft has been unusually non-aggressive so far–which, let’s be honest, is not really in its aggressively aggressive nature.

In fact, its behavior has been almost Zen-like–despite rumors, I do not expect that they will release a new slate of directors for Yahoo until they absolutely have to, for example.

But just because it has has been patiently waiting for that clock to run down, does not mean it will not get out the brass knuckles.

It could do anything from lowering its bid to waging a nasty public fight to walking away. And it is clear that Yahoo stock is basement-bound in that event.

Of course, self-restraint is probably a tactic it will stick to, since Yahoo is its one big chance to actually give Google a run for its money.

Because many, including myself, believe that if the merger does not get done, as search share continues to decline for both Microsoft and Yahoo and increase for Google, it will increasingly be a case of a pair of pygmies taking on a giant.

The truth is for the Internet’s continued good health and innovative growth, because Google as the overwhelmingly dominant player is flatly dangerous for everyone (except Google, of course).

Perhaps it is–in a lesser way–how Microsoft was in the last era, especially given how open the Web has become, but such concentration of power is never good for consumers.

Thus, there needs to be a credible and significant counter to the market power of Google in all arenas–search, display and a range of other arenas.

And while it is not a given that Microsoft and Yahoo combined could pull that off, I think it is safe to say, there is no other combination–not Yahoo+AOL, not Yahoo+eBay, not Yahoo+News Corp.–that comes close to having a chance to do that.

Over the weekend, I wrote another post speculating that the all-quiet-in-the-Yahoo-front situation led me to the obvious determination that Microsoft and the Internet portal just had to be talking, at least furtively, even via pigeon-carried messages.

Whether or not such talks will take flight, we’ll all just have to wait and see.

Please see this disclosure related to me and Google.