I think the first thing that has to happen is for MS and Yahoo! to get past the anti-monopoly/anti-trust checkpoints.  Not an expert in that field but I expect there will be much shouting about monopolies and such.

After that, assuming they merge, I think it is better for us.  We only have to consider 2 engines to get the top X% of SE-traffic rather than 3 unique personalities.  I don't think, however, that it will change my strategies because my strategy is to write a good site that is of interest to my intended customer, get good links to it, avoid anything spammy, and wait for the search engines to figure out that my site's the best.    There is a tiny bit more but if you go much beyond this you'll end up chasing windmills in my opinion.

Good question Mitch - looking forward to what others say.

  YaBing!

I doubt that Yasoft will have any trouble with anti-trust. After all, Google is simply enormous already, and no one has seriously bothered them. Microsoft has been able to ignore regulator's attempts (here and in Europe) to control its predatory monopoly practices for almost 20 years, so I can't see that giving Google a bit more competition (maybe) is going to cause anyone to come down on MS. About the only thing that might happen is that MS is prohibited from favoring its own search engine(s) in IE (such as making it difficult to get to Google), but if that hasn't happened already with MSN/Bing, it's unlikely to happen now.

Many commentators have wondered if MS + Yahoo will be a case of 1+1 = 1.2 or even 1+1 = .8. For both parties, it has a whiff of desperation to it. MS has just not been able to crack Google's dominance on its own, and Yahoo has been steadily sinking. They appear to be in this to have MS fund the effort, and keep their head above water.

It's possible that Yasoft will reach some sort of critical mass that will let them survive (in the search business) and even grow. However, I don't see people shifting en masse from Google, unless the Big G really stumbles badly. If they get too distracted from search with their web apps, it could happen, but so far they've shown brilliant management. And don't forget that people don't "search" for things any more -- they "google" for it. That's precious mindshare when your name becomes a verb.

Microsoft to Hire 400 From Yahoo

I have a suspicion that Yahoo is going to wither away and vanish as MS hires away staff and top talent leaves (not wanting to work for MS, or stay with a foundering ship). After a while, you won't hear anything more about "Yahoo!".