Yahoo!, the struggling internet portal, has delivered another snub to Microsoft as it bids to take over the company by announcing that it is joining a Google-led social networking initiative.

Yahoo! has so far turned down Microsoft's $45 billion cash and shares offer, saying it undervalues the company, and today it further frustrated the software giant's ambitions by signing up to Open Social, the Google-led consortium which aims to make it easier for software developers to write applications for networking sites such as MySpace.

Google is Microsoft's great rival in the growing market for internet services and its chief executive, Eric Schmidt, has made significant efforts to thwart the attempted takeover of Yahoo!, including ringing his counterpart at Yahoo! to discuss a partnership through which the two companies might fend off Microsoft.

The move is the latest in a series by Yahoo! since Microsoft's $31 dollar a share bid was first made public that have served to mark the defiant position of its chief executive, Jerry Yang. Last week Yahoo! said it expected revenues in line with analyst estimates for 2008, and forecast a 25 per cent growth in revenues in 2009.

This morning Yahoo! shares rose 3.2 per cent to $28.40 after a Citigroup analyst said it was likely Microsoft would raise its offer given that Yahoo! was "aggressively pursuing strategic alternatives", including a possible tie-up with Time Warner, the media group.

Under the terms of today's agreement, Yahoo! will join the 'Open Social' alliance and collaborate with other internet companies such as MySpace, which is owned by News Corporation, parent company of Times Online, to develop a set of standards that developers can use across all social networking sites.

Microsoft declined to comment.

Many social networking sites, including MySpace, have said they welcome applications written by third-party developers that can be downloaded and used by their members, but at present there is no way for applications to be easily shared with other sites.

Currently developers such as those who created the music recommendation service iLike are forced to write separate code for each site on which they want their application to be available - a burden the OpenSocial alliance hopes can be lifted.

The addition of Yahoo! to OpenSocial means that Facebook and Windows Live Spaces, Microsoft's portal, are now the only major networking sites not to have joined the project. MySpace, which has 78 million users worldwide, Orkut, Google's networking site, and Bebo, which was recently bought by AOL, have all signed on.

Yahoo! has taken several steps recently to indicate it intends to carry on with 'business as usual' in spite of having to fend off Microsoft's offer.

This month the company announced it was opening two new research labs - one in Israel, and the other in India - and in February it unveiled oneConnect, a tool designed to streamline the use of different communication tools such as e-mail, instant messaging, texting, and social networking sites, on mobile phones.

In its annual report last month Yahoo! revealed that it was facing lawsuits from several shareholders who alleged that the decision to reject Microsoft's offer had been "destructive to shareholder value". It also admitted that the bid was taking its toll on management and staff.

Microsoft is understood to be willing to use its right as a Yahoo! shareholder to nominate its own executives to the Yahoo! board and in turn force the company to accept its takeover proposal.

The deadline for nominating new directors was to have been March 14, but Yahoo! has now extended it.

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