This just gets better and better by the second: now Microsoft (NSDQ: MSFT) and News Corp (NYSE: NWS) are in talks about combining forces to bid for Yahoo (NSDQ: YHOO), in an unlikely meeting of minds. This would create a behemoth out of MSN, Yahoo and MySpace, and be even more difficult to pass the anti-trust muster, reports NYT.

As NYT states: “If News Corporation throws its weight behind Microsoft’s offer, that could allow Microsoft to raise its bid, putting even more pressure on Yahoo and its shareholders. At the same time, the alignment of Microsoft and News Corporation would remove a possible alternative for Yahoo, leaving it with fewer opportunities to escape Microsoft’s grasp.”

Yahoo’s board is expected to meet this week to discuss its options.