Microsoft (NasdaqGS: MSFT) and Google (NasdaqGS: GOOG) are reportedly in a bidding war for Yahoo (NasdaqGS: YHOO), joining a pool of technology companies.

Yahoo has rallied in October and is one of the tech stocks driving PowerShares QQQ (NasdaqGM: QQQ) higher. The Nasdaq-100 ETF has climbed above its 200-day moving average, while the S&P 500 remains below this technical indicator.

Both Microsoft and Google are pursuing Yahoo, according to reports, but there is a glitch. Neither tech company is actually interested in running or buying the company — rather they would be the silent investor to a private equity firm. And many private equity firms are poised and gearing up to be the highest bidder.

As of Sept. 30, Microsoft had $57.4 billion on its balance sheet, while Google had $42.6 billion, reports. Companies are searching for investments that can gain yield, as there is so little income gained money markets and safe bonds.

Both companies are rumored to be helping private equity firms finance rival bids, in an attempt to invest in the digital media company. Google is currently Yahoo’s largest rival in online search. [Sector ETFs; Navigating the Stock Sell-Off]

Analysts are saying that Google could either be trying to scoop up Yahoo for itself or to drive up the cost of Yahoo. [Tech ETFs Flat With Hewlett-Packard, Yahoo in Focus]

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