Google is clearly not happy about the Microsoft Yahoo situation and Eric Schmidt has called Yahoo’s chief executive Jerry Yang to offer his company’s help in any effort to thwart Microsoft’s bid.
The main alternative (assuming the analysts are right in saying regulators wouldn’t let Google take over Yahoo) is for Google to sign a deal with Yahoo to power their organic and paid search results in the same way that they power AOL’s results. This would let Yahoo dramatically reduce their R&D budget and get an instant cash injection from Google. Of course they would then have to share ad revenues with Google but they would still get a revenue share in the long term and retain control of their brand.
What I fail to understand is how Google can get upset at Microsoft for wanting to take over Yahoo on one hand and then plan to show their search results all over the Yahoo domain on the other hand. Surely that would be much worse for competition?