Microsoft is trying to ensure a seat at the negotiating table if Yahoo decides to sell part or all of its business, by signing a confidentiality agreement with Yahoo.
Reuters and the Associated Press reported that Microsoft has signed a nondisclosure agreement with Yahoo, citing persons familiar with the situation. The move will allow the software giant to take a closer look at Yahoo's business.
The DealReporter and The New York Times also confirmed the reports, although Microsoft and Yahoo have not provided official comments.
Microsoft joins several private equity firms that are also poring over Yahoo's books and operations, as they explore various options for striking a deal with the struggling internet company.
Yahoo fired its chief executive in September and is considering options to revamp its business and its stagnant revenue growth.
Microsoft unsuccessfully tried to buy Yahoo in 2008 for as much as $47.5 billion.
The New York Times reported that Microsoft is primarily interested in protecting its internet search advertising alliance with Yahoo if its partner pursues a sale or a dramatic reorganization. Yahoo's search engine is primarily powered by Microsoft's Bing engine in return for 12 percent of the ad revenue generated from the results, according to an agreement
between the two companies signed in 2009.