In a dumb series of events, MS offered Yahoo a large some of money to take over their company, Yahoo refused, and then we got a surprise. There are now talks of Yahoo merging with AOL, which is partly owned by Google.
So, lets say Yahoo does merge with AOL, not only is that far less of a threat that a Yahoo/MS merger, but Google might even pull out of AOL if that happens, or not. Either way it means that Google will likely profit even more from this whole mess.
Yahoo should have accepted Microsoft’s offer, the two might have been able to form some sort of competitor for Google, at least to some extent, where as on their own, or even with AOL and Yahoo merged, not MS, not Yahoo, not AOL, not anyone can compete with Google. Personally I am perfectly OK with that as Google is doing an amazing job at what they do and without it I might die, but from the business side of things Yahoo may have shot themselves in the foot.