Microsoft is increasingly under pressure to compete with Google, which plans to beef up its portfolio with a $3.1 billion buy of online advertising company DoubleClick Inc.
Recently Yahoo announced plans to buy 80% of advertising exchange Right Media for $680 million, increasing its stake in that company to full control.
Microsoft currently trails both Yahoo and Google in the lucrative and growing business of web-searching.
Google won a search advertising deal with AOL in 2005 that the Post said Microsoft wanted.
In addition, Google is developing web-based software that directly competes with Microsoft Office.
Unnamed sources in the Post story said Microsoft's latest approach to Yahoo, one of many it has reportedly made over the years, signals increased urgency.
