Microsoft said in a statement that it was not at present looking at a complete acquisition of Yahoo and was discussing alternatives.
However, Microsoft said it reserved the right to reconsider full acquisition depending on future developments and discussions with Yahoo, shareholders or third parties.
The statement did not provide any details of what alternatives were being discussed, but said there could be no assurance that any transactions would result.
The announcement comes after Yahoo director Carl Icahn put pressure on the board to reconsider the Microsoft bid.
Microsoft’s offer to buy Yahoo for £24.2bn was turned down earlier this month. The software company raised its initial offer of £15 a share to £16, but Yahoo demanded £17 a share, which Microsoft was not willing to pay.