Microsoft and Yahoo! may figure out some way of joining forces to compete better against Google. The options range from an outright merger, to a spin-off of Microsoft's internet assets into Yahoo! as a separate, but kissing cousins company.
Most of the reasons being cited for doing something are defensive rather than offensive. It's hard to do something offensive even when you're just a big, incumbent company trying to digest much smaller acquisitions.
And it doesn't always spell synergies in terms of consolidating redundant operations.
Just consider that the other Yahoo! story being discussed on Techmeme today is Yahoo! finally deciding to close down it's much larger, 2 million user strong Yahoo! Photos, and just go with Flickr, with it's 500,000 users, as it's primary photo site. And this is TWO YEARS after it acquired that company.
Microsoft's no better at consolidating. A DECADE after acquiring Hotmail, Microsoft still offers a hodge podge of email services to users, under msn.com, hotmail.com, etc.
So it remains to be seen if something happens here, and how it's structured and presented.
Both tasks are going to be hard, but neither will be hard as executing the strategy after it's been structured and presented.