Boy is this starting to get confusing. After Microsoft weighed in with a massive $40 billion offer for Yahoo, rejected for ‘undervaluing’ the company, Rupert Murdoch’s News Corporation has now stepped in.

According to the Murdoch owned Wall Street Journal, News Corp is in talks about a deal which would see Yahoo merge with MySpace. The Aussie tycoon snapped up the social network in 2005.

Details remain sketchy, but it’s believed News Corp would take a 20% stake, allowing Google’s main rival to remain independent.

Having access to the likes of MySpace could potentially make Yahoo a more realistic competitor to Google, and would probably be a more attractive option than straiking a deal with MSN.

This one looks like it could drag on for the best part of the year. As ever, as soon as we get sniff of some news, you’ll be the first to know.