AP

YAHOO!'S co-founder and boss, Jerry Yang, and his board had this coming. For three months they did everything they could to rebuff Microsoft, which was offering to buy the internet company at a big premium to its value before the bid. They succeeded, if that is the word, when Microsoft walked away in frustration this month. Yahoo!'s shareholders were livid, and have been saying so. The proxy fight that Microsoft itself shied away from now appears likely to start anyway.

The person to launch it is Carl Icahn, a shareholder activist who is feared by boards across America that he has taken on or threatened. Since Microsoft dropped its bid for Yahoo!, Mr Icahn has bought 59m shares, worth more than $1.5 billion, in the company and has applied for regulatory permission to buy lots more. And his first action as a shareholder has been to send Yahoo!'s board a letter that amounts to a public flogging.

Yahoo!'s board, Mr Icahn wrote, “acted irrationally” in its response to Microsoft. It has “lost the faith of shareholders,” he continued. To him it is “obvious” that Microsoft's bid was “superior” to any value Yahoo! could create on its own. He is “perplexed” by the board's behaviour, he said, which is “irresponsible” and “unconscionable.”

One pictures Yahoo!'s wounded fiduciaries gulping. They may indeed be on their way out, because Mr Icahn is nominating his own slate of ten directors in their stead. It is a cheeky line-up, consisting of himself and several private investors who have been his partners. There is also a corporate-governance professor and a media tycoon turned investor. Above all, there is Adam Dell, the brother of Michael, founder of the eponymous computer company, who once sold a company to Yahoo!; and Mark Cuban, who got rich by selling Broadcast.com to Yahoo! at the height of the dotcom bubble and now owns the Dallas Mavericks, a basketball team.

Mr Icahn does not always succeed in his attacks on boards he considers soft, but often. He recently played a big role in forcing another technology company, BEA Systems, a neighbour of Yahoo!'s in Silicon Valley, to resume negotiations with Oracle, another software company in the valley, that led to its acquistion.

In Mr Icahn's favour is that he has a good point. The overwhelming logic for a combination of Microsoft and Yahoo! is that this appears to be the only way that the two can put up a good fight against the new superpower of web search, online advertising and the Internet in general, which is Google. As a reminder, on the day of Mr Icahn's letter, Hitwise, an online-measurement firm, released the latest market-share numbers in American web searches. Google's share once again went up, to 67.9%, and both Yahoo! and Microsoft fell, to 20.28% and 6.26% respectively.

And what has been Mr Yang's proposed alternative so far? To do a deal with Google, in which Yahoo! would outsource part of its search-advertising technology. Mathematically, this could indeed boost Yahoo!'s profits somewhat, and thus raise its technical value, because Google is better at placing ads next to search results that consumers actually click on, and collects more revenue for each such click. But for Yahoo! this would amount to total capitulation in its effort, after years and billions spent, to catch up with Google in precisely this technology. Yahoo! would in effect resign to becoming a second-tier internet player, not unlike Ask.com, another search engine that uses Google's advertising technology.

Even assuming that Mr Yang and his board now feel the pressure, would Microsoft come back to the table? Mr Ballmer, its boss, may just be playing the game tactically, but his frustration appears to have been real. Engineers in both companies have been griping about a combination. In the bigger battle against Google to attract and retain the brightest geeks—ultimately the crucial factor in the search wars—the uncertainty of an acquistion cannot help. Mr Yang had better become very co-operative indeed, and quickly.