Two thoughts... [1] We need more big time players in the search engine world, not less. To go from 3 to 2 means less competition, and more dependency on only 2 companies for most of our traffic. That could be a problem. I'd like to see FOUR primary search services, each with about 25% of the market, but that is probably a pipe dream;
[2] I had great hopes for MSN/LIVE when they first launched, and in fact got a ton of traffic from them until they poisoned their own well last October. So my concern about them buying Yahoo is whether they will manage to bury them also, since the same MSN people will presumably have input to how Yahoo operates.
Admittedly there is an up-side -- maybe MSN realizes it cannot get search right, so they'll take the best people from their recent acquisition of the Norwegian company Fast, the best people from Yahoo, and will finally get it right.
Also, it's not a given that the US government would approve this sort of deal, since it lessens competition. The EU may also stop it, so I won't lose sleep YET...
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