What's to defend? Competition is good. Not that I'm thinking of switching--I do well with AdSense, I think Google is likely to find ways to keep quality publishers from jumping ship, and I feel a certain loyalty to Google if only because Google Search has treated me well over the years.
As for Google's losing out to Yahoo, it's always been inevitable that Google would eventually lose some of its huge market share to new competitors. That doesn't necessarily mean Google will lose revenues. A rising tide lifts all boats, and the contextual ad market will grow enormously in the years ahead.