Microsoft has bowed out stating they would not enter into the second round of bidding for Hulu. Apparently, they didn’t like what they saw and chose not to whip out a cool $2B for the video service. Meanwhile, Yahoo! has upped the stakes and Apple is ready to step in? Here’s the latest on the sale of the year.

OK, you might not really care who buys Hulu, so it might not be the sale of the year (unless it ends up going to Netflix). Microsoft didn’t like what they were seeing and so have stepped out of the sales meetings without even making the second round of bidding. That, to me, means they just didn’t like what they saw or couldn’t see enough benefit in dropping that much cash on it.

So while they’re out, Apple, might be stepping in according to two anonymous sources. Seriously, Hulu has a major information leak it seems. I can see the owners again shying away from selling to Apple. It would not only limit competition overall, but most likely lock down the content to just iOS devices where, if it went to a company without a hardware platform, it could be accessible to more people, meaning more revenue and higher licensing prices. Plus, Apple already has some irons in the fire in regards to acquisitions and could be ready to shell out some $5B, so is another $2B a prudent move?

Yahoo! (which also has a leak) is said to be ready to offer the $2 Billion for Hulu, provided they get exclusivity on the content twice as long as the Hulu owners are offering. They want four or five years or they say, it’s just not worth the money.

Yahoo! might be a good fit as they’ve got the widgets who are all over the place. It’s estimated that their Web TV widget platform is on around 8 million connected devices (source) and that number could double by end of the year. That would then be 16 million potential customers, 16x more than the current Hulu subscriber base.